In the Boardroom

BY LORI R. STORM, CAMEX, CCAM

As I write this, I have been working mostly from home for the past few weeks. My computer is hooked up to my company’s network, my mobile phone is connected directly to my desk phone and my craft room is now my office. Association boards have had to navigate what actions they should or should not take as daily news conferences from our governor bring out new and changing information and as counties have implemented and updated mandatory and suggested restrictions.

When drought became a real and semi-permanent reality, boards had to adapt to zero-scape planting, artificial turf and monitoring of restrictions on watering.

When wildfires threatened or consumed associations, boards had to implement emergency planning, have ongoing discussions with attorneys and insurance carriers, and try to keep in communication with sometimes scattered members of the community.

Now we are looking at yet another type of emergency and boards once again are adapting to and considering what is the association’s responsibility and what actions they can or should take.

At this point, associations have mostly opened their clubhouse doors, their pools and tennis courts to the members. But with this easing comes the question of what is the legal and ethical responsibility to members? What will trigger another shut down? Are associations under the same requirement for physical distancing, face coverings, and sanitizing?

In the last three years, association boards have had to look way beyond their normal responsibilities. Remember those?

Take care of the common area and the amenities • Abide by the law • Keep the members in compliance with the CC&Rs

Today’s world looks very different and there is no end in sight. Today we are dealing with a pandemic and its fallout. But California will continue to experience wildfires, earthquakes and the occasional tornado. New laws sprout up constantly. Members will feel harassed and discriminated against, folks are aging in place bringing more complexities to overseeing what is truly a delicate ecosystem. There was a time that boards felt as though they could manage their communities on their own. This is no longer true. Associations must rely on a team of professionals for advice and direction. And the very best boards lean on their teams for guidance. It is time for volunteer boards to embrace and plan for the growing need of their expert team. How can boards prepare for the unknown?

BUDGETING

The first thing a board must seriously consider is ensuring there is budgeting for more expert advice than you have in the past. The corporation and its shareholders cannot afford the liability involved in “figuring it out on your own.” Take a hard look at your budget and plan for additional management hours, legal advice and potential engineering and construction review. If you do not have contingency lines in your operating and reserves, now is a good time to get those in place. It is time to listen to your manager, whose company is working with dozens or hundreds of communities. It is time to rely on your attorney, who is connected closely with legislation and legal minds all over the state. And boards will have an increasing need for contractor, reserve, investment and insurance advisors. All of these people provide greater insight so that better

decisions can be made.

Boards also need to be nimble and flexible in their thoughts and processes in order to deal with the unexpected. Emergency plans are important. Informing the members of what steps the board is taking to help prepare for such emergencies is vital.

Communication with the members is one item managers hear time and again as concerns in an association. Boards must embrace as many modes of communication, as often as they can. This becomes of central importance as association circumstances continue to change.

Managers have seen boards and an association’s members adapt to technological solutions to the physical distancing needs far more adroitly than we might have anticipated. Meetings are being held online or via teleconference with members watching or listening from home. These modes of communication offer an opportunity for a greater percentage of the membership to engage in the process than they have in the past. This represents another way for associations to reach out to members, not only for board meetings but townhall meetings and even candidate events for director elections. additional benefits as well. I spoke to an 80-year-old board president recently who is incredibly delighted with Zoom meetings. “Now I can mute the attendees, make them raise their hands to be called on! Meetings have never gone so smoothly!” Boards are more accepting of board packets being delivered electronically and figuring out how to bookmark pages and add in comments without having to print out the pages.

But today’s crisis is just one of a string of things we are experiencing in California. Drought will always be with us, creating conversations and innovations for water use. Wildfires have wiped out clubhouses, homes and infrastructure for associations all over the state. But losing these things do not wipe out the associations. There are still obligations and responsibilities, decisions and planning that have to go on.

More than ever before, expertise and innovation are key to managing your community well. Planning for these eventualities now will not only make working on behalf of your association easier, it will help bring in new board members, who will understand that they will have experts available to get them through the next inevitable challenge facing the association.

Lori R. Storm, CAMEx, CCAM, is Division Vice President of Client Development at The Management Trust.

By Andrew Hay, CAMEx, CCAM-ND.PM

In order for a new development to be successful, the developer and manager (as an association representative) must learn to communicate effectively and develop systems that provide clarity and consistency to the membership. In the worst case scenario, the developer and the management company are pointing fingers at one another saying the issue is because one didn’t do what they were supposed to do.

There are two basic and distinct roles the developer plays in new developments. First is as the developer, and often builder, of the community. This is what they specialize in and what they have proven success doing. Managers should attempt to gain as much perspective of this side of things as early as possible in the process so they can best serve the community and help new homeowners adjust to living in that specific HOA.

Too often managers are quick to say why something shouldn’t have been done a certain way without understanding the driving force behind why the developer may have done it. Challenges in the community could be driven by city or county requirements, BRE mandates, or any other variety of other reasons. But, unless the manager asks the developer, they will not know. Why aren’t the mailboxes in yet? When will the streets be cleaned? When will the amenities be ready? Why is there no parking here? Anticipating these questions before they are asked by the homeowners and relying on the developer’s knowledge will give you a good perspective and understanding of the property you manage.

For example, one issue that may come up is knowing that owners will not get mail service until a community is 50% sold out because the United States Postal Service dictates that will save you a lot of headache and heartburn early and often.

The CACM New Development specialty course covers the process developers go through to get a community approved by the state and local governments and can help prepare you with the correct questions to ask and information to request from the developer.

The second role the developer plays is that of developer board member. It can prove difficult for them, and the homeowners, to distinguish this role as different than the developer. As managers of new developments, we are in a unique position to provide guidance to developer clients to help them change their perspective on the community when they serve in the board member role. They are no longer the developer, but rather a representative of a member of the community whose decision making as a fiduciary should reflect what is best for the association.

As professionals we owe it to them to explain this difference and help them to see life from that perspective. It is common for developer board members to defer to the homeowner board members when making operational decisions

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that affect the community. We must remind them that they are also part of the community and have a perspective that others do not and encourage them to provide that input and actively participate in those decisions.

Developer board members sometimes think they know more about associations than they do because they have served on many boards or have built many communities with HOAs. But rarely do they know better than a professional certified manager.

HOAs are what certified managers specialize in and have proven success doing. Too often managers acquiesce to an idea proposed by a developer because we see them as the resource most knowledgeable on the community. Be confident and assured that you know the community and the industry enough to respectfully educate them in the same manner you educate your homeowners.

Obtaining the perspective of the developer and providing your perspective as a manager to them makes for an easier transition if larger problems arise in a community. If an issue arises with the construction of the development, knowing the perspective of the developer will help you provide guidance to your board.

Management companies are too quick to call attorneys and begin investigative work rather than taking a pragmatic approach to work with the developer to resolve an issue. Many issues with developers can be resolved amicably if the issues are kept in perspective to the greater good of the association. Knowing how a developer works, and how they view a community, can help you manage difficult situations more efficiently.

New developments are a blank canvas with many different artists vying for painting their version of the picture. As managers, we serve as the palette and are able to allow for many different colors, or perspectives, to be used by those doing the painting. If we don’t bring in all of the perspectives, including that of the developer, then what can be left is either a monochromatic, inept community or a divided piece that ripples throughout the association’s existence and becomes a burden on our time.

Homeowners will always give you their perspective—it’s their personal life and investment. Understanding and incorporating the perspective of the developer allows managers to bring both sides together to create a masterpiece.

Andrew Hay, CAMEX, CCAM-ND.PM is Vice President, Management Division of The Helsing Group, Inc

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