By Gail R. Gudder, Moeller Graf
In the technologically-driven culture in which we now live, the question arises as to what is required of volunteer leaders as far as staying educated about all the technology options available? The flip side of that question, of course, is the question of security and privacy that can arise from taking advantage of the many technological resources. These questions have become even more pertinent in the past year and a half as the pandemic pushed meetings online and forced managers to go remote. This article will briefly examine the obligations of HOAs to provide technological education for its Board of Directors and Owners.
Board of Directors
The Colorado Common Interest Ownership Act (“CCIOA) C.R.S. §38-33.3-209.6 provides a means of financing Board education using common assessments. This provision governs the content of such education but does not make such education mandatory. In order to get reimbursement using common assessments, the CCIOA requires that the educational meetings and seminars be related to responsible governance of the Association, be specific to Colorado and make reference to the CCIOA.
Looking at §303(2), the declarant appointed Board members are required to exercise the care required of fiduciaries. The Board members that are not declarant appointed are not held to this same high standard of care and (for “full CCIOA” communities) will not be liable for acts or omissions made within the scope of their Board duties unless the acts or omissions are wanton or willful. Added to this is the Colorado Revised Nonprofit Corporation Act (“Nonprofit Corporation Act”), C.R.S. §7-128-401(1), which requires that volunteer leaders discharge their duties in good faith with the care of an ordinarily prudent person and in a manner believed to be in the best interest of the nonprofit corporation.
So, what does all this mean when considering technology education in general and in a post-pandemic world? Likely, it is no longer acceptable for Board members to remain resistant to online meeting tools such as Zoom, Google Meet, or Microsoft Teams. We have found that virtual meeting platforms have made Board and owner meetings much more accessible during the pandemic, to the point where we question whether it is prudent to disregard the ability of a group to hold virtual or hybrid meetings even when it’s not necessary. Luckily, these applications are extremely user friendly and relatively secure. The pandemic has caused Board members to become more adaptable and tech savvy.
Other technology that could be valuable for Board members in their responsible governance of the Association:
When choosing what products to use, Boards must be cognizant of security and privacy requirements as well as the cost to adopt and the cost to learn. Clearly, all members of the Board do not need to be educated in all the products that are adopted, but the primary user should have a good working knowledge of the tools used.
A final issue that may arise in connection with Board member’s education is the expertise of management companies hired by Associations. Under Colorado law, association managers and management companies are currently not required to be licensed and therefore don’t have continuing education requirements for licensure. However, in order to stay competitive, managers are well served to be, and largely are, very tech and technology-security savvy. While the Nonprofit Corporation Act §401(2) specifically states that directors or officers are “entitled to rely on information, opinions, reports, or statements … prepared or presented by” a variety of experts, this provision does not absolve the Board members of their ultimate duty to manage and make decisions for the governance of the Association.
The CCIOA §38-33.3-209.7 sets forth the requirements related to Owner education. This provision includes a mandate that is not present in the Board education provision and states that the Association shall provide, or cause to be provided, education to Owners at no cost at least once a year. The provision goes on to state that the Board is to determine the criteria for compliance with this section. There is little guidance in the CCIOA pertaining to this requirement. This section of the Act provides that the education must address “the general operations of the association and the rights and responsibilities of owners, the association and its executive board under Colorado law.” Technology education could fall within the “general operations of the association” language. Examples of technology training that might be offered to the Owners are:
As with the education of the Board members, the Association must keep in mind the security and privacy issues of providing these educational opportunities, as well accessibility to Owners who do not have access to the necessary technology.
When carrying out their duties to the association, the members of the Board must consider how best to educate themselves and provide education for the Owners. The lessons in the pandemic, we believe, show that using technology to include owners in association operations has been extremely helpful and has resulted in easier and more robust participation on the part of the owners. We hope the lessons learned during the pandemic with respect to the use of technology can continue to foster a lower-cost exchange of information and greater participation by the owners.
Moeller Graf was founded in 2005 by Tim Moeller and David Graf. Both partners have been practicing for 20+ years. David Graf is nationally recognized as a leader in the community law space with a heavy emphasis on educating others. Tim Moeller has dedicated extensive time to legislative groups who lobby on behalf of improving the HOA experience and outcomes. The firm currently employs eight additional attorneys, all with a diversified skill set ready to tackle the challenges that any situation may bring. The firm has dedicated its practice solely to representing the entity of Common Interest Communities. The practice is a full-service firm within community law focusing on; transactional, litigation and collections/recovery work. The firm currently has two locations in Colorado and is seeking additional regional expansion in the coming months. The client and manager experience is at the forefront of how Moeller Graf believes it is differentiating and defining itself as a premier provider of community law in Colorado.
By Clint Larson, Saddle Rock Security
For decades now, we have been able to use proximity cards, keys, or codes to open a locked door.
Cards have had some advantages over keys and codes, but those advantages have disappeared. It is very easy to copy these cards, just like you would a key. Once the keys or cards are copied, then you lose control of who has access to the facility.
Today there are smart access control systems that give you the ability to utilize smart phone technology to authorize and grant access directly from the phone. Rather than turning on your phone, opening the app, and then clicking on the app to open the door; you can leave the phone in your pocket or purse, and then wave or touch the reader to activate the door.
So what?You can use your phone - how will that help? These systems are cloud based, in other words they are connected to the internet, but again, so what?
Well, once they are connected to the internet, you can start to connect them to other connected products.
What would you be able to do if your access control system was connected to the property management software? How about a reservation system for the club house or pool? How about cameras or lights?
Let’s look at a couple of items, like club house reservations and property ownership transfers.
How do you handle access now? What if someone loses the key/card, or gives out the code? How do you get the clubhouse key back, or how often do you change the code? What if someone moves into the community, and they want access to the pool the same day? What if you have 2 or 3 reservations on the same weekend? Who is responsible for the cleanup if there is a mess? How would you limit the number of people at the pool or gym? How do you address package delivery or vendor access?
With a smart system connected to other services, these questions are easily addressed.
Connecting to the management software then allows you to control who has access to the pool, let’s say. So, if the owners wanting access to the pool are delinquent or have an outstanding violation, then access would be removed (in accordance with the governing documents and policies). Once the delinquency was corrected or the violation satisfied, access would then be reinstated. This could all be done without any intervention by the manager or anyone else.
With smart access controls, you have the ability to enable a self-service reservation portal for residents. Users would then be able to schedule the date and time they wanted, receive access to the clubhouse during their reserved time slot, all without talking to the management company or having to deal with keys, cards or codes. With this type of system in place, you could accommodate more reservations without the worry of double-booking the space.
For vendors, you can schedule them for specific times, or they can call in when they are on the property and the manager can remotely open the door from anywhere, or you can provide them with a self-service vendor portal where they can manage their own access.
You can also connect cameras to smart access controls to record a quick video clip of who opened the door once it’s activated. You also have the option to have lights activate when the door is opened.
With the Smart access control systems that are now available, you can throw away your keys and fobs!
With the utilization of smart phones, you will receive better control and reporting, especially since people are less likely to let someone borrow their phone to go to the pool, then they are to loan a key or card.
Cloud-based reporting is part of some smart access controls systems that gives the manager and the board better insight as to who and when the facilities are being used. They can now find out exactly how many people are using the pool, gym, or clubhouse. They can find out what time of day and how many times a day it is being used, or how many times it is being used in a week or month. With this type of information, boards can now make more informed decisions about expenditures and upgrades to the existing facilities.
Clint Larson the CEO of Saddle Rock Security has more than 20 years of service to management companies, managers, boards, and communities. For more information, please reach out to firstname.lastname@example.org.
By Ginny Campbell, CAI-RMC Editorial Committee
We all know it’s not so fun to spend money on those pesky community projects that don’t have a big wow-factor. The pretty projects are fun, but predictive maintenance is often the most valuable. It can be much less stressful for leadership to avoid maintenance topics that create tension among your community members. It might even be popular to side with a frugal board and defer larger repair needs. But as good stewards of association funds, is it always best for managers and board leaders to put off repairs, in hopes of keeping the peace?
One HOA board president thinks it is ot. For this article, we will call her “Jane.” Jane is the president of her community’s association, and she has seen what happens when delayed routine maintenance becomes a million-dollar+ emergency in a matter of years. The problem was their 443 elevated decks, staircases, and walkways in her community. Many of these were shared spaces between units. Water intrusion and general wear were ignored for years, finally amounting to a massive effort to coordinate the repairs with urgency.
Prevention would have been simple enough: Route downspouts to avoid water intrusion, perform deck repairs early on, tackle the appropriate coating and caulking maintenance yearly. When finally a realtor posed a lawsuit threat due to injury while onsite, the community took note and responded.
“The general mood about the deck repairs was negative,” Jane says. “People did not want to pay for repairs. We heard quite a few owners say that they could fix their deck in an hour, or knew someone who could. After hours dissecting community by-laws and declarations, it was decided that homeowners did not have the right to hire anyone to work on limited common elements without board approval.
Jane explains the process almost like five stages of denial (and finger-pointing) before real progress was made. The community did not trust the board to handle such a large project, and asked that they form a committee of non-board homeowners. This new deck committee ended up being key in convincing the owners that repairs were needed, and MUCH sooner than later. Multiple unbiased vendor bids and observation reports were vital in educating the homeowners.
Multiple payment options were entertained, including a second monthly assessment. This was rejected due to the time it would take for funds to accumulate. A large loan option was suggested, and in the end, thatwas the best way to finance the project.
Due to the amount of shared community spaces, it was decided for everyone to share costs evenly, as opposed to individual homeowners paying very different amounts per household. Almost a year into the project, Jane says, “People have accepted the project, but we do have those who still believe that ‘their deck was fine.’ The decks throughout the community were in many different stages of disrepair, but every one of them needed work.”
Financing gave owners two options: 1) pay one lump sum of roughly $5,600 per household with no interest, or 2) finance over 5 years, adding $110/month to their regular monthly dues. “Out of 254 units, we had approximately 80 pay up front. Those who paid up front actually helped those who financed, because we ultimately borrowed less money, lowering the interest owed.”
If she knew then what she knows now, Jane would have done things a little differently:
“First step, get non-boardmember homeowners involved immediately. When a board starts to think about a big project, this is the time to engage homeowners and understand community bylaws. This gives people more confidence that the board does not have an ulterior motive.”
“Next, make sure you have a management company capable of handling multiple bids and financing. We did not have good management for the first two years of the project, which delayed progress and ballooned the scope.” Underqualified management puts too much responsibility on the volunteer board members, and impacts the mood and opinions of owners. “Think about it like this: if your management company can't handle small work orders, they surely cannot handle the massive projects.”
Finally, be transparent. Negativity spreads like wildfire. Jane tells us that even one small indication that information is being withheld is enough to create discord. “Not every single thing needs to be disclosed, but keeping everyone abreast will help a lot.”
She also suggests that when homeowners say they know a company that can do a project cheaper, don't immediately say no. Have their referral contact the management company directly to determine if the project fits their insurance and manpower abilities. “Some companies never reached out to our management at all. This was a very small thing that spoke volumes.”
This is a common tale among communities like this. Band-aiding the problem is often the easy way to go, but having a predictive mindset can save your association hundreds of thousands of dollars in just a matter of years. Imagine how far those extra funds can go when a great leadership team helps align the community with the bigger picture! Strategic planning, predictive maintenance, and investing in repairs early will always amount to a better use of the association’s budget, allowing you all kinds of wow-factor opportunities down the road.
Ginny brings a broad background in multifamily services to her role at Denver Commercial Property Services, building relationships between homeowners and contractor partners. She stays busy outside of community association work with her three kiddos, a passion for live music and outdoor fun.
By Jessica Towles, CMCA, AMS, PCAM, Hammersmith Management
Owners and Board Members across the country have been shaken to the core by the tragedy at Champlain Towers South in Surfside, Florida. It is hard to believe it was several months ago. As with all disasters, time will continue to pass. We will change our vernacular from “months ago” to “earlier this year” to “last year” to “several years ago,” and with those changes, the fear will fade further and further into the past. More likely than not, we will again become complacent. Keep reading for lessons you can take from this tragedy to help your communities today.
What lessons can we take away from the building collapse at Champlain Towers South?
#1 – Do the right thing even when no one else is doing it.
It is completely human for us to want to return to a place that feels "normal" and to want to reestablish our routines. It is also human for us to stop pushing specific issues or discussion points after being told no over and over again. As Board Members and Community Association Managers, we often receive pushback when raising assessments, discussing major structural repairs, and making recommendations or decisions that benefit the greater good but may be temporarily painful. We have to be vigilant that our return to normal includes a continued focus on best practices, following our fiduciary responsibilities, and heightened awareness around our aging communities and infrastructures.
#2 – Ask questions.
There are no stupid questions. If you're concerned about building safety, cracking, the reserve study for your building, an engineering report, etc., – ASK questions. Are you a Board Member? Ask your manager to set up meetings with the appropriate business partners to help break down issues or reports. Ask to do a physical tour. Are you a manager? Talk to your coworkers, ask your supervisor, talk to your business partners. And my number one recommendation for any manager is to be curious. If you haven't seen a particular issue before and have someone come out and look at the situation, join them, bring a notebook to take notes, and ask questions. Not only will you learn more about the specific problem, but you will also gain knowledge about the physical components of your building(s). Knowledge is power. Ask questions so you can make knowledge your SUPERPOWER!
#3 – Know your Reserve Study.
Undoubtedly, having a Reserve Study helps minimize Board Member liability, assists in long-term planning, and helps provide transparency with your community membership. It is just as important to read, review, understand this report, and plan to implement the recommendations it presents. Your Reserve Study is an essential tool that sometimes contains bad news. Either a building component is failing sooner than initially anticipated, or your funding needs have changed, and you need to increase how much the Association is putting into reserves. Regardless of the situation, your Board needs to plan to address the issues, so the community is in the best position possible in the long run. It isn't mandatory to raise your assessments 150% when you have to increase reserve contributions drastically. You can plan to increase the contribution incrementally over a few years to meet the community's long-term needs. However, your Board chooses to get there, the most critical piece is communicating the plan to your owners!
#4 – Budget appropriately.
Many line items within the Reserve Study will have both operating and reserve line items. For example, concrete repairs might be performed annually or semi-annually based on inspections and reported issues. If a particular piece of concrete heaves or becomes a trip hazard immediately following that year's phase, do you wait an entire year or 24 months before repairing it? No. It would be best to have funds set aside for those repairs either in a general maintenance line or a specific concrete operating line.
In addition to ensuring you have the appropriate operating and reserve lines planned for, you need to budget appropriately for all of your operating expenses. Sound financial planning begins with expenses. Determine the needs and desires of the community members to determine the level of service you will provide to the community. Has your Association always pulled weeds from your plant beds weekly? Changing that to monthly may save money in the landscape contract, but what are the unintended consequences? Once you've determined the expenses, you can then calculate your assessments. Labor rates and materials continue to increase. It often is not reasonable to have a zero increase in assessments year over year. You will have to cut services in some areas to accommodate increases in others. That often leads to deferred maintenance and reduced curb appeal.
If you are interested in additional resources on Aging Infrastructures and our Fiduciary Responsibilities, please visit www.caionline.org/CondoSafety.
Jessica Towles, Vice President of Community Management, has been in the community association management industry since 2000 with experience maintaining all aspects of community associations and management company administration, including facilities management, financial management and customer retention. In addition to her role with Hammersmith Management, Inc., Ms. Towles currently serves on the Community Associations Institute (CAI) Board of Trustees and is the 2021 President Elect. As a member of the National Faculty for CAI, specializing in the M:100 The Essentials of Community Association Management, she is well equipped to provide continuing education and leadership development to staff, board members, and owners. Ms. Towles ishonored to have received CAI’s Rising Star Award at the National Conference, as well as the Barbara Wick Award recognizing her work both locally and nationally to improve our industry and profession.
By Karl Mertens, M.S., P.E., Knott Laboratory, LLC
Property managers have a fiduciary responsibility to property owners to retain professionals as needed to help maintain the health of a property. Engineers can be an integral part of this team as they hold an over-arching responsibility to protect the public, specifically if hazards develop in buildings.
The confidence an owner places in an engineer should be backed by thoroughness during the site visit where an engineer uses a similar methodology during every facility condition assessment to document any issues previously known or unknown. After a problem is identified, it is the responsibility of an engineer to consider the severity of the problem. This extends beyond the obvious and immediate issue and reaches into second order thinking about what is contributing to the issue, what future issues will this cause, does it repeat at areas that are not visible, does it need to be addressed immediately, and what impact will this have on the owner and/or occupants of the building. As such, raising a life safety concern about an immediate structural failure is a last resort for engineers and is only used to protect the public from harm.
However, it is possible to prevent a building from reaching the uncomfortable discussion of life safety that neither the engineer nor the owner desires to have. Much like an annual health care checkup where physicians monitor your health for any changes or indications of a declining condition, regular engineering checkups are extremely valuable in early detection of problems. Typically, any declining condition caught early is much easier to address and provides more options for treatment. When detected early, the problems are generally less extensive and less costly to maintain. This can be achieved through maintenance and monitoring the condition of the facility over the service life of the structure. As buildings age, unaddressed problems begin to compile, increasing the risk of structural issues, failure and certainly the cost of repairs increase. These increased risks and costs are minimal at first, but typically grow exponentially as time passes when not accounted for.
As such, maintenance and monitoring have multiple elements to consider:
As outlined above, regular maintenance is vital to the performance of a building, especially as it ages. Thus, when establishing a fiduciary relationship between both property owners and property managers, an engineer can be a valuable asset.
Karl Mertens is a Structural Engineer that oversees Facility Condition Assessments for Knott Laboratory. Karl has a wide breadth of structural engineering experience including high rises, medical facilities, hotels, condominiums, higher education buildings, k-12 schools, public works, and new construction/remodel of residential homes/townhomes. Karl enjoys spending time with his family, exercising, and being outside.
By Chris Baker, FRONTSTEPS
First-time homeownership surged after COVID-19, fueled by pent-up demand and historically low mortgage rates. Many of these homeowners are young and will own homes for decades. Their loyalty is enormously valuable to management companies, but it won't come easy. Young consumers are tech-savvy, independent, and impatient. Modern tech is increasingly important in creating the community experience that residents crave. In my conversations with management company executives, they increasingly stress the importance of putting tools into homeowners' hands to manage community living on their schedules and at their convenience. Failing to meet the technological needs of young homeowners could prompt resident turnover and detached, disengaged homeowners.
Here are three homeowner expectations that we see discussed in the marketplace:
Social Connection – Millennials are the first generation with social media embedded in their personal and professional lives. This generation is motivated to stay connected and updated with news, trends, and viral media. 36% of millennial users say they use social media to get their news. It's no surprise they're looking for the same connectivity when becoming a member of an HOA. These homeowners want information on their community 24/7; they want to self-serve and have the convenience of getting things done on their own time. These types of users take advantage of updating their profiles, viewing and joining events, reserving amenities, submitting work orders, and submitting payments. In turn, all these actions completed by these tech-savvy consumers help and provide value to management companies. Providing consumers this type of important information on a unified platform will set communities apart moving forward.
Simple Payments – eCommerce and online banking have been on an upward trend for years, and the pandemic accelerated that shift. Today, 71% of banking is completed online, and 43% of transactions are done on mobile devices. Consumers expect secure and straightforward options when it comes to paying for goods and services, in all aspects of their lives through their HOA. For communities, this means offering solutions that include instant access to upcoming bills, the ability to pay with a few taps, and a log of historic payments for peace of mind. Association boards also benefit from this shift, because it gives them better visibility into theirfinances, provides recurring payment options for consistent only time dues, and helps track delinquencies.
Secure Communities – This past year we saw online shopping grow by 25%. Consumers want their shipments quickly, but more importantly, securely. Many software companies offer security options for homeowners so they can they track these important packages after they have entered communities. These types of features become essential to homeowners living in condominium or high-rise communities. Homeowners can take security measures while sitting on their phone at home, by issuing guest passes to those who need access into the community, etc. All they have to do is enter a name and phone number, and that guest is given a QR code to access the community.
Offering knowledge, communication, and ease of usability will ultimately give these businesses the competitive advantage they're craving. Management companies should focus on working with software companies that appeal to the new expectations of young owners. Mobile apps are good for business, they move more transactions online meaning less overhead, better reporting, and less effort to scale operations. By adopting and enhancing the software provided to homeowners, they’re increasing their chance of securing loyal, long-term residents.
“Chris Baker is the Chief Sales Officer at FRONTSTEPS. Chris has been working with the Community Association Management industry for over 10 years and he’s an expert on helping Management Companies optimize their business with technology. His mission is to help your company grow faster, reduce expense and do more with your existing resources.”
By Aaron J. Goodlock, Orten Cavanagh Holmes & Hunt, LLC
In the wake of the Surfside condominium catastrophe, many communities are grappling with how to address risks associated with aging and deteriorating infrastructure. Among the many lessons learned, the importance of deliberate and long-term financial planning and the avoidance of deferred maintenance may be one of the most paramount.
Boards of directors are routinely faced with prioritizing and balancing various interests when it comes to utilization and preservation of association funds and resources. A variety of factors, including pressure from owners, can influence the decisions that boards make in terms of establishing and maintaining adequate reserve funds, the frequency of conducting reserve studies, and undertaking (or deferring) capital maintenance and repairs.
The magnitude of the Surfside tragedy underscores the importance of commissioning regular, comprehensive reserve studies. Prudence dictates that such reserve studies must necessarily include an inspection and analysis of the physical structures/components as well as major mechanical equipment and systems (e.g., building foundation and structural elements, HVAC and boiler equipment, drainage facilities, utilities, elevators, fire suppression systems, etc.). Engaging professional reserve specialists, engineers, and others to regularly inspect the various structural components and central mechanical systems helps to protect associations and communities from experiencing disasters similar to Surfside.
However, simply having a reserve study performed is not sufficient. Associations must be proactive in addressing and correcting problems and concerns identified in the reserve report and setting aside necessary funds for future replacement and repairs. Associations would be remiss not to heed the professional advice of reserve specialists, engineers, etc., with respect to repairing and replacing aging, deteriorating, or damaged infrastructure. Boards that ignore or fail to adhere to such advice can put the association and the community at significantly greater risk. Alternatively, boards of directors that engage professional advisors and listen to and follow their advice substantially reduces the risk of liability.
The healthiest and safest communities (i.e., those least likely to experience disaster, get hit with large special assessments, or face significant potential liability) are also those that actively plan for the repair and replacement of aging infrastructure by: (1) establishing and maintaining fully-funded reserves (commencing after the initial construction by the developer/builder is complete); (2) periodically conducting and updating reserve studies (ideally annually); (3) budgeting for and performing regular maintenance to preserve (and possibly extend) the remaining useful life of capital assets; and (4) avoiding deferred maintenance.
The current regulatory framework in Colorado is extremely lax in terms of physical inspection requirements and/or mandatory reserve funding. There are no statutes in Colorado that require associations to undertake regular inspections or put aside funds for future repairs or replacement. Accordingly, it’s incumbent on boards of directors, as fiduciaries, to assume such responsibility and ensure that the property is regularly inspected and adequately maintained.
Despite the lack of statutory requirements, associations and boards should strive to maintain fully-funded reserves, continuously assess maintenance needs, and diligently perform regular and routine maintenance. To accomplish these objectives requires active board member engagement and owner communication regarding community needs and expectations. The association’s reserve study report, reserve specialist recommendations, and budgets are useful tools to educate owners about the importance of maintenance and financial planning.
A crucial element with respect to maintenance is to avoid unnecessary or prolonged delay. If damage is identified during an inspection or otherwise, the association should take prompt steps to fix the problem and make any necessary repairs. Depending on the nature of the problem, repairs can be funded and paid for from the association’s operating or reserve funds. If there are significant structural concerns and the association does not have adequate funds to pay for the repairs, the association should consider alternative funding options such as a special assessment or obtaining a loan, and increasing the association’s budget to meet ongoing operating and maintenance expenditures, as well as replenishing and funding future reserves.
Lastly, safety – not frugality – is key. The safety and integrity of the community’s buildings and infrastructure must take precedence over any contrary desire to minimize assessments. Sacrificing maintenance and repairs puts associations at substantial legal and financial risk. Conversely, investing in regular upkeep and improvements will have numerous positive impacts, such as increasing the marketability and property values in the community, which is both advantageous to owners and desirable to future, prospective buyers.
Aaron J. Goodlock is an attorney at Orten Cavanagh Holmes & Hunt, LLC. He provides general counsel and transactional services to community associations throughout Colorado.
By Alicia Granados, Pacific Premier Bank
With the reality of aging infrastructure on the minds of so many today, association leaders may be wondering how to best prepare for unanticipated expenses. What if that big project we’ve been putting off can’t wait much longer due to declining property values or health and safety concerns? Is our association in the right position to fund a large renovation or critical structural repair that may not have been included as part of our reserve plan?
Thankfully, in recent years community managers and board members have become more aware that there are banks who specialize in lending to community association loans. A loan can be a great solution, often allowing an association to avoid a large, lump sum special assessment. Work can be completed in a timely manner and with less expense than a project that must be phased out over many years. Some may even assume that adequate reserve funding is less important because a loan will surely be available when the need arises.
But what if it’s not? What types of issues might prevent your association from being able to obtain a loan and what can be done today to assure your community is in the best possible position to obtain financing in the future?
Governing Documents – Some governing documents include language that prohibits an association from taking out a loan or may require prior approval by some percentage of the membership. It’s a good idea to get ahead of the game. Be sure you are aware of any provisions related to borrowing and consult your association’s attorney to determine whether a document amendment might be appropriate to allow this option in the future.
Adequate Assessment Levels - Assessment levels need not only be adequate to make loan payments, but the association must be able to meet all of its operational expenses and fund any other projects that will need to be performed during the term of the loan. Working to maintain a well-funded reserve will help to assure that your community is in a strong position to obtain a loan for unforeseen major expenses.
Financial History – Associations with inadequate accounting records or large, unreconciled adjustments may be unable to qualify for a loan. Financial records should be complete and the board should work closely with financial professionals to resolve any outstanding issues.
Delinquencies – Specific underwriting requirements vary, but banks will look closely at delinquent assessments when considering whether an association will be able to repay a loan. If a substantial increase in regular assessments or the addition of a special assessment is needed to meet loan payments, it becomes more likely that additional owners will become delinquent. In order to be in the best position, your association should actively manage its collection policy to resolve any large outstanding accounts and keep delinquencies to a minimum.
Reserve Study– The availability of a current reserve study provides the bank with a strong picture of the future financial needs of the community. Associations with an out of date study or no reserve study at all will have a more difficult time demonstrating the ability to meet expenses during the term of the loan. You can assure that your community is in the best position by regularly updating your reserve study and following the recommended project and funding plans.
None of us can anticipate every need for the future of our communities. But, considering some of these focus areas will put your community in the best position to qualify for an association loan, should the need arise in the future.
Alicia Granados is the HOA Sales Manager for Pacific Premier Bank Community Association Banking and the current Treasurer of CAI-RMC. She is a 25 year industry veteran and holds her Educated Business Partner distinction, as well as her CMCA, AMS and PCAM designations
By Meaghan Brown, CAI-RMC Editorial Committee
For over a year, our industry has been forced to endure a number of challenges as a result of the COVID 19 pandemic. With people’s homes and communities at stake, there’s little time to spare. We’ve had to rise to the challenge and come up with alternative solutions quickly in order to continue business as ‘usual.’ One of those solutions that we’ve all come to know well is the use of virtual meetings. Here,, I’ve asked four industry leaders to share their experiences around virtual meetings and ultimately examine the question we’ve all been waiting with bated breath to find out…. Are virtual meetings here to stay?
Ben Sloman (Associa): Boards were generally quite hesitant when we all started moving fully to virtual meetings. They had to learn new things and change. We did not just have meetings for Board and Owners, but we also started some computer skill meetings. These included getting on the phone with the owner and guiding them through opening up web browsers, reading and following instructional emails, and seeing themselves on camera!! We still complete these virtual meetings and all throughout these meetings we always have owners that would prefer to connect via phone or physically want a meeting. Over time we have seen a lot more participation via the virtual meetings platforms - a lot more people are attending and Board members are much more familiar with how to use the virtual platforms.
Kevin Lovett (Summit Resort Group): We have found that Board member response to virtual meetings is split… We have about half of the HOA Boards that have accepted (and even prefer) virtual meetings and the other half of Board members prefer in-person meetings. I do not think the perception has really changed over time… It seems that the folks that were ok with virtual meetings at the beginning of the pandemic are still ok with virtual meetings now, and those that were not fond of virtual meetings at the beginning of the pandemic, are still preferring in-person meetings.
Chris Marion (CAP Management): The majority of our Boards gladly embraced the use of virtual meeting technology to maintain Association business during the initial social distancing restrictions. Like the rest of the country, our Boards, Managers, and Homeowners all experienced some level of “zoom-fatigue” and were looking forward to resuming in-person meetings sometime in the future. Since the alleviation of the restrictions, we’ve seen a mixed response from our Boards. Some are quite eager to open up the clubhouse for the next meeting, while others are perfectly happy to continue meetings virtually.
Ben: I see a lot of benefits with virtual meetings although there certainly are pros and cons for both physical vs virtual meetings. One of the main benefits of having online meetings is that you are able to use functionality, such as sharing your screen. You can show maps, documents, budgets, and photos, for example, and all attendees can see and hear well since they sitting right in front of the computer and not 40 feet back in a conference room. We are able to follow the agenda through sharing the screen and everyone is looking at the same thing rather than having printed packets that get rustled in the background and side conversations going on for additional distractions.
Kevin: There are many benefits to the use of virtual meetings. One is efficiency for both the managers and the Board members (and owners). In today’s hectic, fast paced world, minutes add up and when managers and board members can eliminate commutes to attend meetings in person, valuable time is saved which can be put toward completing needed tasks. Additionally, virtual meetings allow for increased attendance at meetings. Here in resort communities, many board members and owners live in other parts of the countries and are unable to attend meetings in person. There are also benefits of cost-savings with conducting meetings virtually… no need for paper copy expenses, meeting venue rental fees and refreshments.
Chris: Many Board Members have appreciated a more electronic experience, including the use of digital Board packets (rather than printed), an organized homeowner forum via chat rooms, and the ability to “screen-share” RFPs and Agendas, for example. Perhaps the most noteworthy benefit is the convenience of joining and participating in a meeting from anywhere! We have received wonderful feedback ranging from working parents who can listen while cooking dinner, to off-site owners living in different states.
Ben: The biggest challenge is getting people into the meeting in the first place since they need to enable their camera, microphone, and speakers.
Kevin: The main challenge with virtual meetings is user issues… many of our homeowners are retired and lack some of the technical skills that are considered standard for the younger working population.
Chris: The occasional audio/video issues can of course be disruptive to the flow of a meeting. However, these occurrences seem to be less and less frequent as we’re all becoming virtual meeting experts. The most challenging aspects of the virtual Board meetings seem to arise during an Annual Meeting. First, for a large community, it can be difficult to record attendance, which is critical for communities that require a quorum of members. Secondly, the ability to conduct an anonymous membership vote during a virtual meeting is problematic to say the least. We are still working on an efficient solution for secret voting.
Ben: Yes, I definitely think they are here to stay, they are more convenient, can happen all over the world and have a lot of functionality that can accomplish nearly every task.
Kevin: Yes, I think virtual meetings, or at least a “hybrid,” (holding meetings both virtually and in person), are here to stay… The younger working owners are very used to virtual meetings and seem to prefer them. The retired owners still seem to prefer in-person meetings, so I see hybrid meetings becoming more popular!
Chris: Yes, we believe some version of virtual meetings will become a norm in the industry because of the many benefits discussed. The problem we are seeing is the configuration of a hybrid meeting. Without proper audio/video technology, the hybrid meeting model can be very frustrating and largely ineffective for virtual participants. For now, we have invited our Boards to utilize our company’s tech-enable conference room for hybrid meetings while we slowly decide which format is truly the best for each community.
About our Participants:
Ben Sloman is a Supervising Community Association Director and oversees the Associa Community Association Management team in Colorado Springs. Ben holds both CMCA® and AMS® credentials from the Community Associations Institute and is currently completing his Real Estate license and working towards his PCAM credential. Ben has worked as a licensed Community Association Manager in major cities and resort areas throughout his career. He enjoys getting outside every day to enjoy the sunshine and everything nature has to offer, he is an avid mountain bike rider, but will take anything in step to have fun with friends.
Kevin Lovett is President of Summit Resort Group, which is a full-service property management company serving the Summit County, Colorado area. Summit Resort Group specializes in HOA management as well as short-term and long-term rentals and has a number of experienced Real Estate Brokers.
Chris Marion is the Chief Sustainability Officer of CAP Management, serving community associations around the Denver Metro Area. Chris holds a Masters Degree in Sustainability Planning and Management, bringing many years of experience working with buildings and landscapes to the industry. Chris primarily works with Boards on development of long-term, comprehensive plans to modernize community infrastructure in a cost-effective way.
About the author:
Meaghan Brown is an Account Executive at EmpireWorks Reconstruction, working with HOAs, multifamily, and commercial properties for their exterior, community-wide reconstruction projects. As an Account Executive, Meaghan acts as the liaison between their production team, the community/property manager, board of directors, and residents throughout the course of each project. Some of their core services include roofing, carpentry, EIFS/stucco, concrete, painting, decks/walkways, steel fabrication, and construction defect services.
By Geneva Cruz La-Santa, CP&M
Our communities are like our bodies; all the stress alleviation endeavors in the world won't help us if we aren't taking care of ourselves or our communities. Reflection or Meditation will not do us any good if we aren't getting sufficient sleep. When we try to reflect or meditate, we might doze off because we are not taking care of our body's need for sleep. If we doze off on the care and maintenance of our communities, we are allowing the exterior breakdown of our building, our core strength, our foundation. Similarly, hitting the gym occasionally won't relieve much stress if we only fuel our bodies with junk food. We need to take care of our basic needs first if we want our stress relief activities to be practical. Like our communities, band-aiding or patching a concern does not alleviate the problem but temporarily hides the prolonged issue.
As we provide self-care for our bodies, a conscious act we take to boost our physical, mental, and emotional health, we provide for our long-term well-being. We must interject the same type of self-care into our communities. Many forms of community self-care can be taken. Like we do for our bodies, we ensure we get enough sleep every night or take a moment to step outside for a few minutes for fresh air. We must provide our communities with routine maintenance of roofs, gutters, siding, windows, painting, grading & drainage, foundation & concrete, patio & decks, crawlspaces and landings, and steps & railings.
Community self-care is crucial for maintaining our communities' resilience towards stressors in life that we cannot eliminate. When we take steps to care for communities' buildings' interior & exterior, we set our communities up to be better prepared to handle other issues that may arise. Unfortunately, however, some communities view community self-care as an indulgence rather than a priority. Consequently, managers are left feeling overwhelmed and ill-equipped to handle a community's inevitable maintenance challenges. Managers need to assess how they and their HOA boards are caring for communities in different areas to ensure the building structure, and surrounding areas are being well taken care of and regular maintenance is transpiring.
You need to take care of your buildings if you want them to provide a strong foundation. Remember that a strong connection between your building's exterior and interior helps the community become an efficient and desirable place to live. The best way to cultivate and maintain a great community is to put time and energy into building: your relationships with your board, your service team, and your contractors. There isn't a certain number of hours you should devote to these relationships; the key is to figure out the community's ultimate goal and set the path to achieving it. A community self-care plan is not a one-size-fits-all strategy. A community self-care plan needs to be customized to each community's needs. Assess which areas of your community need more attention and address it, then reassess your community often. As your community ages and itsneeds change, your community self-care needs are likely to alter too. When you discover that you're neglecting a specific aspect of your community, create a plan for change. You don't have to tackle everything all at once. As communities get older, more repairs and replacements are required.
Develop a Community/Building - Self-Care Plan
The importance of community self-care cannot be spoken about enough; working with a good core team is the first step to success.
My name is Geneva Cruz-La Santa, I have been with CP&M (Community Preservation & Management, Inc.) and its many entities for 17+ years. I have enjoyed watching CP&M grow into a full-service General Contractor with an in-house roofing division (R3NG). CP&M specializes in providing solutions for commercial property managers, HOA managed multifamily and single-family communities, REO rehabilitation, apartment industries and government housing entities.
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