CAICF Central Florida Times | 1st Quarter 2022 by Overflow

CENTRAL FLORIDA TIMES

CAICF.ORG | 1ST QUARTER 2022

ASPHALT

1ST QUARTER 2022

CONTACT INFORMATION P.O. Box 941125 Maitland, FL 32794 www.caicf.org exdir@caicf.org 407-913-3777

2022 BOARD OF DIRECTORS Frank Ruggieri, Esq., President Jarad Pizzuti, President-Elect Tracy Durham, CMCA, AMS, CFCAM, PCAM, Vice President Leslie Ellis, CPA, MSA, CGMA, Treasurer Jessica Cox, Secretary Stacey Loureiro, CMCA, AMS Lynne Sadowski Matt Vice, Past-President Tom Wheir Ken Zook

A Message from the President Dear Valued Chapter Members: The first quarter of 2022 has obviously had its challenges but I truly sense a new direction and return to normalcy as we approach the second quarter of the year. Our monthly luncheons have been filled to the brim and there appears to be a genuine sense of excitement as we try to move past Covid and the absence of the restrictions with which we have all become familiar. I am particularly excited about our new Community Association grant program which will provide opportunities for Central Florida communities to demonstrate their enthusiasm for community and obtain a grant to further critically needed projects. I feel that I have personally benefited greatly from the friendships and connections I have made through CAI over the last 23 years of my career. As we move into the second quarter of 2022 with renewed excitement, we must constantly remind ourselves of the critical role we play in providing meaningful assistance and contributions to communities throughout Central Florida which should always be the focus and reason for our Chapter. I look forward to seeing more and more of you in person at upcoming CAI events and certainly our monthly luncheons. Sincerely,

Frank Frank A. Ruggieri, Esq., The Ruggieri Law Firm President, CAI Central Florida Chapter

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1ST QUAR T ER 2022 | CENT RAL FL O R I DA TI ME S

FROM THE CED

Chapter News BY REINI MARSH, CHAPTER EXECUTIVE DIRECTOR

t has certainly been a busy first quarter and I am happy to report that we had a very successful CA Day & Trade Show on February 11th! The floor was buzzing with all our Managers, Business Partners and HOA Board Members. The attendance was great and people were happy to get back to “normal.” Check out some of the pictures on page 6. We are already working on planning the 2023 CA Day & Trade Show. If you have any ideas on a theme, please send it my way at exdir@caicf.org so I can send it to our dedicated and steadfast committee members. Many committee meetings are taking place. We will be having a Social Committee meeting in the coming weeks. We have a couple of new charities that we will be supporting in addition to The House of Hope. Once again “Thank You” to all my volunteers, I could not do this without you. The Chapter is doing very well, the Board has been working on several initiatives and we will be rolling out some new things coming up soon, so stayed tuned! 4

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We will be asking for some volunteers to help sell Chapter Party tickets at the 2022 CAI Annual Conference & Exposition in May. It is a fun job and will give you a taste for the convention with a chance to meet some of the movers and shakers there. Please let me know if you are interested.

SAVE THE DATES! More info on these events can be found on page 8 and caicf.org: • CAI Annual Conference in Orlando on May 4th-7th at the Rosen Shingle Creek in Orlando • Chapter Party on May 5th at SeaWorld’s Discovery Cove from 7pm-10pm • No monthly meeting in May due to CAI Annual Conference • June 2nd will be the next Monthly Meeting at Dubsdread • Meet the Managers is July 14th at 2pm at the Winter Park Events Center on Morse Road • Toga Bowling will be in September (More to come!) • Annual Golf Tournament will be October 21st at Orange County National

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1ST QUAR T ER 2022 | CENT RAL FL O R I DA TI ME S

CHAPTER UPDATE

Calendar of Events More details regarding upcoming events will be posted to caicf.org under the “Events” tab. Check back regularly for the most up-to-date information. CAICF Board Meetings will be held before or after each of the Monthly Meetings. Please be sure to register for all events in advance, as we need an accurate head count for space and food purposes prior to the event. Thank you for your help! •

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April 7th: Monthly Luncheon Meeting - Water, Water Everywhere CEU presented by Ask An Adjuster at Dubsdread in Orlando. Registration begins at 11:30am and the program begins at 12pm. Manager Members and Homeowner Leaders are FREE and Business Partners are $30. Click here to register. Want to sponsor the April meeting? There is one spot left! Click here for all the details. May 4th-7th: CAI National Annual Conference & Exposition: Community NOW in Orlando. Join us at the industry’s largest event for managers, management company executives, community association homeowner leaders, and service providers. Over the past two years, you’ve discovered new ways to conduct business and manage your communities. Attend this unparalleled networking opportunity and share your strategies with peers and learn new solutions from experts in the industry.Dig deeper into the topics that impact, influence, and inspire your communities and business. Our exceptional line-up of education sessions promises to deliver content to help you engage and excel personally and professionally. Click here for more information and to register. May 5th: CAICF Chapter Party at the Annual Conference from 7pm-10pm at SeaWorld’s Discovery Cove. Join us for a “Cool Drink in Your Hand and Toes in the Sand!” We encourage everyone to wear flip flops and dress casually for this social event. Enjoy the sounds of a Caribbean band (Cocoa Bean)

playing music while you enjoy the view of dolphins swimming, great food and beach games! Come as you are, no masks required for this party and the dolphins won’t be wearing any either! Click here to register. •

June 2nd: Monthly Luncheon Meeting at Dubsdread in Orlando. Registration begins at 11:30am and the program begins at 12pm. Manager Members and Homeowner Leaders are FREE and Business Partners are $30.

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July 14th: Meet the Managers at 2pm at the Winter Park Events Center (1050 W. Morse Boulevard).

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August 4th: Monthly Luncheon Meeting

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September 1st: Monthly Luncheon Meeting

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September TBD: Toga Bowling Tournament

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October 6th: Monthly Luncheon Meeting

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October 21st: Annual Golf Tournament at Orange County National Golf Center and Lodge in Winter Garden.

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November 3rd: Monthly Luncheon Meeting

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December 1st: Annual Meeting & Holiday Party

SPONSOR AN UPCOMING CHAPTER MEETING IN 2022! Each sponsor for the Chapter Meetings receive face time in front of the membership with the microphone to talk about your company. You will also be able to put give-away items and collateral on all the tables. Space is also provided for our sponsors to display their marketing materials. Every sponsor is important to our chapter and your generous donation goes directly to off set the costs of the program. Only three sponsors are permitted per program. Please consider sponsoring today! CONTACT REINI MARSH AT EXDIR@CAICF.ORG OR 407-913-7777 8

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LOOKING FOR A SERVICE PROVIDER? CAI Central Florida has a list of great service providers in most every industry a Community Association could need! The best part is, they are members! Check it out at: caicf.org/directory.

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1ST QUAR T ER 2022 | CENT RAL FL O R I DA TI ME S

EDUCATION

Upcoming Orlando Workshops & Manager Education Classes

COMMUNITY CONNECTIONS WORKSHOP SERIES This series is hosted in partnership by Orange County Neighborhood Services Division and the City of Orlando Office of Communications & Neighborhood Relations. The workshops are free to all. Census Updates and Redistricting - Why Should you Care? Saturday, April 9th from 9am-11am The 2020 census provides demographic snapshots of our nation and all of its cities and counties. The City of Orlando and Orange County have certainly seen our population change over the last ten years. Come take a look at our community photo album, see how our population has changed, and learn how the census results were critical to redistricting, the adjustment of city and county commission district boundaries. Click here for the workshop information and to register on Eventbrite. Neighborhood Roundtable - Creative Ways Neighborhoods Came Together and Thrived During a Pandemic Saturday, May 14th from 9am-11am The year 2020 will be remembered as the year the pandemic shut down Central Florida and the rest of the world. The past two years have shown us that we live, work and communicate differently. Neighborhood groups have had to quickly adapt and change how they conducted business and meetings. This roundtable will share the creative ways neighborhood came together and what lessons were learned. Click here for the workshop information and to register on Eventbrite. New Ways of Social Engagement Saturday, June 11th from 9am-11am Interaction with our neighbors continues to be essential for building 10

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a strong community, regardless of the obstacles that the pandemic and busy lives present. Effective community networks may look different today, but they’re still a critical means to empower neighborhood engagement. This workshop outlines low-effort ways to build bonds with your neighbors and strengthen the social networks that will make your community stronger than ever. Click here for the workshop information and to register.

EDUCATION FOR MANAGERS CAI offers many online learning opportunities (click on the dates below to register or obtain more info) that lead to professional credentials. View the 2022 Education Catalog for additional resources. » April 21-22 - M:100 - The Essentials of Community Association Management (Live Virtual Class) » May 2-4 - M:100 - The Essentials of Community Association Management (Orlando) » May 2-3 - M:205 - Risk Management (Orlando) » May 3 - M:202 - Association Communications(Orlando) » May 3 - M:305 - Manager and the Law(Orlando) » May 20-22 - M:202 - Association Communications(Orlando) » May 21-22- M:203 - Community Leadership(Orlando) » May 26-27 - M:360 - Leadership Practices in Building Community (Live Virtual Class) » May 26-27 - M:203 - Community Leadership (Live Virtual Class) » June 2-3 - M:100 - The Essentials of Community Association Management (Live Virtual Class) » June 16-17 - M:202 - Association Communications (Live Virtual Class) » June 23-24 - M:370 - Managing Developing Communities (Live Virtual Class)

1ST QUAR T ER 2022 | CENT RAL FL O R I DA TI ME S

NEW CHAPTER MEMBERS

BUSINESS PARTNERS

BUSINESS PARTNERS CONT.

MANAGER MEMBERS CONT.

American Security & Investigations Tom Harman

Westwood Exterior Solutions, Inc Ryan Lolly

Brandon Exline, CMCA, AMS, PCAM Sentry Management Inc.

NATIONAL BUSINESS PARTNERS

Lisa Carpenter WLCA-7 Committee/Staff

Axela Technologies Luis Gonzales Cuevas, Garcia & Torres P.A. Andrew Cuevas

Connery Swift

Reagan Rivard WLCA-7 Committee/Staff

DH Striping Company Joe Campolong

Vantaca, LLC Maegan Woytek

Juanita Velilla WLCA-7 Committee/Staff

FITREV Doug Thomas

MANAGER MEMBERS

VOLUNTEER LEADERS

Joshua Lawrence Deknoblough, Sr.

Margaret Duncan

Courtney Gabbert

Wilfredo Will Gonzalez

Wendy Goodyear

Celia McFadden Celebration Residential Owners Assoc.

Greentek Property Solutions Tyler Goodman Hotwire Communications Gerado Garza JD Restorations Terri Lerner Kevin Davis Insurance Services Kevin Davis, CIRMS Servpro of Winter Park and University Jane Patton

LiftMaster - Chamberlain Group

Jasmine Roberson Alec Sembrat Birgit Angela Burton Access Management Italo Arias Community Management Professionals

Sihle Insurance Group, Inc. Jarad Pizzuti

Conor Finnegan

Summit Broadband Coral Lugaro

Claudette Maldonado

Sunwest Bank Sheila Lee

Victorian Amatucci

VerdeGo LLC Billy Genovese

James Lurkins

FirstService Residential

Leland Management, Inc.

Premier Association Management

Sentry Management Inc.

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Cynthia Swisher Celebration Residential Owners Assoc. Candice Hoke Turtle Creek Homeowners’ Association Dennis Horazak WLCA-7 Committee/Staff Donna Lendvay WLCA-7 Committee/Staff Alvin Little WLCA-7 Committee/Staff Joy Roehnert WLCA-7 Committee/Staff Reginald Shribbs WLCA-7 Committee/Staff

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NATIONAL CONFERENCE

2022 Annual Conference & Exposition

exting, talking and tweeting are all great ways to stay in touch, but nothing compares to face-to-face interaction. The best way to meet people, build deeper connections with colleagues and strengthen peer networks is through real interaction. And the best place to interact with your community association peers is at the CAI Annual Conference and Exposition. The Annual Conference is the most important event of the year for community managers, management company executives, community association homeowner leaders and service providers. Held at Rosen Shingle Creek May 4-7, 2022, the event offers practical strategies to save time and money, unparalleled networking opportunities and the latest innovations from product and service providers.

communities and business. Our exceptional line-up of education sessions promises to deliver content to help you engage and excel personally and professionally.

REGISTER TODAY & SAVE! EARLY-BIRD DEADLINE IS APRIL 6 Click here to register. Full conference registration includes: • All education sessions • All general sessions • Wednesday welcome reception (one ticket) • Thursday expo (one ticket) • Friday expo (one ticket) • Friday Backyard Bash and awards dinner (one ticket) Members: $620 early; $685 standard.

WHO SHOULD ATTEND The CAI Annual Conference & Exposition: Community NOW is the largest event in the community association industry. If you are a community association manager, management company executive, product and service provider for HOAs, condos, or coops, or a community association board member – this conference is for you. Over the past two years, you’ve discovered new ways to conduct business and manage your communities. Attend this unparalleled networking opportunity and share your strategies with peers and learn new solutions from experts in the industry. Dig deeper into the topics that impact, influence, and inspire your 14

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Nonmembers: $770 early; $810 standard. 3rd & Additional People from the Same Company (Discount applies only when registrations are submitted together; members only): $570 early; $635 standard. Homeowner Members: $460 early; $525 standard. Post-Conference Webinar Package: $520 for Members; $670 for Nonmembers. Access to recordings, materials, and CE credits.

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1ST QUAR T ER 2022 | CENT RAL FL O R I DA TI ME S

LEGISLATION

Florida Condominium Safety Legislation Moving Forward BY CAI FLORIDA LEGISLATIVE ALLIANCE (CAI-FLA)

rotecting the millions of residents living in condominiums and other high-rise communities is the top priority of Community Associations Institute (CAI) and the CAI Florida Legislative Alliance (CAI-FLA). CAI is proud to work with Florida legislators on solutions to ensure condominium safety and financial stability of building projects. CAI released the Condominium Safety Public Policy Report in October 2021 and began meeting with Florida legislators to share the report’s findings and recommendations to address building maintenance, structural integrity, and reserve studies and funding following the partial collapse of Champlain Towers South in Surfside, Fla., last June. CAI is pleased that several bills in the Florida Legislature have adopted the public policy positions detailed in the report.

that are at least 30 years-old—one of CAI’s public policy recommendations. SB 1702 has building inspection requirements consistent with the Miami Dade County Grand Jury Report on Champlain Towers South, which includes a letter from the board president that clearly demonstrates the need for building inspections. The Champlain Towers South board president’s letter to residents notes that “observable damage such as in the garage has gotten significantly worse since the initial inspection,” and that “the concrete damage observed would begin to multiply exponentially over the year.” The bill received a favorable report in the Florida Senate Committee on Community Affairs.

SPB 7042: COMMUNITY ASSOCIATION BUILDING SAFETY This bill requires mandatory reserve studies and authorizing a community’s governing board to adopt a special assessment

SB 1702: MANDATORY BUILDING INSPECTIONS This bill requires inspections for all condominium buildings 16

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Continued on page 18

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LEGISLATION be seen, including foundation issues or leaks behind siding and under roofs. The legislation creates expensive and burdensome requirements to comply with before starting legal proceedings and places the risk of a structural defect on homeowners. Reports have circulated indicating potential responsible factors for the Champlain Towers South failure under investigation include water intrusion and corrosion of structural supports, corruption on the part of the building, and absence of the required amount of steel reinforcement. It is disappointing that proponents of SB 736 are trying to change the law to further compromise consumer protections and condominium safety. In summary, CAI urges Florida legislators and Governor Ron DeSantis to pass legislation providing a framework for condominium safety and financial stability that protects the 9.6 million Floridians living in community associations, according to estimates from the Foundation for Community Association Research. Condominium safety is a CAI priority and clearly a priority for legislators. Forty state legislatures have convened sessions in 2022, While we are only one month into the 2022, Florida, Hawaii, Illinois, New Jersey, and Virginia have legislative proposals related to condominium and/or housing cooperative building inspections. Florida, Illinois, Maryland, and Virginia have legislative proposals related to mandatory reserve studies.

or borrow money for certain reasons. CAI believes that SPB 7042 would give boards the necessary authority to make the investment for required maintenance and reserve funding for capital replacements to ensure the funding for critical projects. CAI’s public policy positions for condominium safety are consistent with the recommendations of Florida engineers, the Florida Real Property Probate and Trust Section of the Florida Bar Association, and the Miami Dade County Grand Jury report to ensure a tragedy like the Champlain Towers South condominium collapse never happens again.

To view CAI’s Condominium Safety Public Policy Report, click here. To view facts and figures on Florida community associations, see page 19.

ABOUT CAI FLORIDA LEGISLATIVE ALLIANCE The Community Associations Institute Florida Legislative Alliance (CAI-FLA) was formed in 1987, this diverse group of homeowner leaders, community managers, and representatives from community association business partners provides perspective on how proposed legislation could impact people living and working in community associations.

MEDIA CONTACTS Unfortunately, there are other advocates pushing legislation under the auspices of condominium safety that will ultimately compromise homeowner builder warranty protection. One example of this is SB 736: Construction Defect Claims.

Amy Hawkes Repke Vice President, Communications & Marketing arepke@caionline.org 703-970-9239

SB 736: CONSTRUCTION DEFECT CLAIMS

Dawn M. Bauman, CAE Senior Vice President, Government & Public Affairs; Executive Director, Foundation for Community Association Research dbauman@caionline.org 703-970-9224

CAI opposes this bill, which would shorten the time when an owner; including a community association, must take legal action against contractors for latent or hidden construction defects from 10 years to four. Typically, latent defects are ones that cannot 18

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Florida Community Associations

facts & figures » Approximately 9,600,000 Floridians live in 3,816,000 homes in

48,500 community associations.

» These residents pay $17.3 billion a year to maintain their communities. These costs would otherwise fall to the local government. » 323,000 Floridians serve as volunteer leaders in their community associations

each year, providing $281 million in service.

» The median home value in Florida is $196,800. Homes in community

associations are generally valued at least 4%* more than other homes.

» By 2040 the community association housing model is expected to become

the most common form of housing.

90 77 87 58

» percent say their association’s rules protect and enhance property values (64%) or have a neutral effect (26%).

» percent of residents rate their community association experience as positive (27%) or neutral (60%).

9.28.20

» percent of residents oppose additional regulation of community associations.

» percent always or usually vote in national elections and 73% always or usually vote in local and state elections.

Community associations are private entities, not governments. Residents vote for fellow homeowners to provide leadership—making decisions about operation, administration and governance of the community. Assessments paid by association members cover the costs of conducting association business—such as common area maintenance, repair and replacement, essential services, routine operations, insurance, landscaping, facilities maintenance as well as savings for future needs. CAI supports public policy that recognizes the rights of homeowners and promotes the self-governance of community associations— affording associations the ability to operate efficiently and protect the investment owners make in their homes and communities. SOURCES Community Associations Fact Book 2019. Published by the Foundation for Community Association Research - foundation.caionline.org. Note: Statistics published are estimates generated from seven public/private data sources; including the American Communities Survey.

www.caionline.org (888) 224-4321 @CAIAdvocacy

Home Sweet HOA: 2020 Homeowner Satisfaction Survey. Community Next: 2020 And Beyond, 2018. *Clark, W. & Freedman, M. (2019). The Rise and Effects of Homeowners Associations. Journal of Urban Economics, 112, 1-15.

1ST QUAR T ER 2022 | CENT RAL FL O R I DA TI ME S

LAKE & POND

Beyond the Water: Effectively Managing Lake & Pond Shorelines BY TRENT NELSON, AQUATIC SPECIALIST, SOLITUDE LAKE MANAGEMENT

magine taking an evening walk as the sun sets across the beautiful lake or pond in your community. The sky is pink and orange, crickets are chirping, and a warm breeze blows across the water. Now, imagine looking down at the steep shoreline in front of you, finding that it’s bare, crumbling, and so unstable that you’re weary to venture to the edge. Not only is this an unsightly and even dangerous distraction, it can make residents question the management priorities of their association and deter new homeowners from settling down in the community. Even the most well cared for lakes and ponds are incomplete without regular shoreline maintenance. Preventative management is necessary to support the health and longevity of the overall ecosystem, and management efforts can vary for each part of the shoreline. However, before jumping into implementing proactive and ongoing strategies, existing erosion issues must be addressed. 20

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The most effective solution for severe erosion is installing a bioengineered living shoreline. This is a specialized soil containment system composed of a knitted mesh material that reshapes and anchors the shore in place. This solution has two-fold benefits; in addition to enhancing the aesthetics of any property, professionals can also restore pond volume by repurposing bottom muck during the installation process. Once erosion is corrected, community managers can turn their attention to proactive management strategies that support multiple areas: the littoral zone, the buffer zone, and the landscaped zones that surround it. They all have a significant impact on the overall health of a lake or pond, but each is unique and benefits from tailored management approaches. Continued on page 22

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1ST QUAR T ER 2022 | CENT RAL FL O R I DA TI ME S

LAKE & POND LITTORAL ZONE

LANDSCAPED ZONE

The littoral zone is the sloped “shelf” that connects water to land. Sunlight penetrates through the entire water column in this shallow area. When healthy, the littoral zone can resemble a miniature wetland consisting of native plants that increase dissolved oxygen and create vital habitat for beneficial fish and organisms. Typically, the littoral zone reflects the health of the entire aquatic ecosystem.

This is the area that is generally mowed and landscaped in the vicinity of a lake or pond. This does not simply refer to the immediate property around the waterbody - it can encompass many acres of land depending on surrounding topography, nearby pollution, and urban development. Many factors in the surrounding area can influence a waterbody.

When managing the littoral zone, aquatic experts focus on several priorities. Cultivating a healthy littoral ecosystem means nurturing beneficial species while managing undesirable weeds and algae.

It is crucial to adopt responsible land management practices across a community to maintain ecological balance.

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Regular water quality testing can identify imbalances in the ecosystem and help inform management practices that support healthy littoral areas. Nutrient remediation products can help remove the excess phosphorus and pollutants to improve water quality and reduce cloudiness and odors. Beneficial microorganisms and bacteria can be introduced to help maintain ecological balance and sustain aquatic life— like probiotics for your pond. Sometimes, the littoral zone can become stagnant and oxygen deprived under the hot sun. A floating fountain can help circulate and oxygenate this shallow area while creating beauty and movement on the surface.

VEGETATIVE BUFFER ZONE The buffer zone refers to the area directly on the shoreline above the littoral shelf, extending several feet in elevation. A healthy buffer zone contains native grasses and flowering plants with complex root systems that hold soil in place. These beneficial buffer plants not only prevent erosion, but they also help filter out the debris and pollutants contained in stormwater runoff. Professionals utilize many strategies to help enhance the buffer zone and maintain a healthy living shoreline.

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An ideal buffer should extend 3-5 ft. from the shoreline and grow at least 18 in. tall. Limit mowing in this area to prevent stunted growth and shoreline instability.

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Vegetative buffers are susceptible to the growth of invasive weeds. EPA-registered herbicides are sometimes necessary to target this growth. Professional drones have made monitoring and applications safer and more efficient.

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Eliminate the use of fertilizers or switch to organic products.

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Make sure plants used in gardens and landscaping are native to the area.

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Maintain lawn mowers, cars, and landscaping equipment to prevent oil leaks.

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Bag and dispose of leaves, lawn clippings, and organic debris while landscaping.

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Maintain stormwater equipment to ensure water flows properly during rainstorms.

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Introduce trash receptacles and dog waste stations throughout the community.

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Educate residents about why and how they can support these proactive efforts.

Lakes and ponds are dynamic, ever-changing environments that are impacted by countless environmental and human influences. Properly caring for your waterbody starts with bioengineering a more stable and long-lasting living shoreline. Then, proactive ongoing shoreline maintenance will help ensure your waterbody stays healthy and enjoyable—from the outside in.

Trent Nelson is an Aquatic Specialist at SOLitude Lake Management, the nation’s leading freshwater management firm specializing in the management of lakes, stormwater ponds, wetlands, and fisheries. Learn

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Establish designated paths and docks for residents to enjoy the water without trampling the buffer zone.

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more about this topic at solitudelakemanagement. com/knowledge.

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BASIS OF ACCOUNTING

Your Association’s Financial Statements Knowing the Basis of Accounting BY JEREMY NEWMAN, CPA, NEWMAN CERTIFIED PUBLIC ACCOUNTANT PC

omeowners and Boards receive association financial statements at various times during the year. For many, reading and understanding financial reports can be challenging. Understanding the basis of accounting used to prepare financial reports is a vital first step to understanding what you are looking at. Understanding if revenues are recorded only if earned in the current period, usually a month or a year, or if the revenues include receipts of amounts assessed for a previous or future period; and if expenses presented are for the current period only, or if they are for past or future periods is incredibly important. What if the financial statements show budgeted assessments of $200,000 for 2020, and actuals for 2020 are $260,000? What does that mean? What if budgeted expenses for the year total $150,000 but actual is only $100,000? What does that mean? Understanding your association’s basis of accounting is necessary to provide financial statements readers with a foundation of basic and

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useful knowledge. You may have heard the term Generally Accepted Accounting Principles (GAAP). The accrual method of accounting is the only GAAP-basis of accounting. The accrual basis is the only basis approved by the accounting standards setters. Other bases of accounting, known as “Other Comprehensive Bases of Accounting”, can create more complexity and lack of clarity and useful reporting. So, what are the choices? Some examples:

PURE CASH BASIS Financial statements presented using the pure cash basis only report transactions that affect cash and cash equivalents (money market accounts, certificates of deposit with maturities of 90 days or less). All receipts of cash are presented as increases to cash, and all cash outgoings are presented as cash decreases. Purchases of certificates of deposits would be recorded as cash disbursements. Acquisitions of property or equipment would be recorded as disbursements when an association pays for the Continued on page 26

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BASIS OF ACCOUNTING property. The “asset” would not be capitalized to the balance sheet and no depreciation expense would be presented. If an association has a loan, any proceeds from the loan would be presented as cash receipts. Principal and interest payments should be presented as cash disbursements when they are made. We recommend that only a statement of cash receipts and disbursements is presented. We do not encourage the use of a balance sheet when reporting using the pure cash basis.

MODIFIED CASH BASIS

Expenses that have been incurred but not paid as of the month or year-end should be accrued. An expense will typically be recorded based on vendor invoices or contracts. On the balance sheet, the aggregate total of all expenses incurred but not paid will be presented as accounts payable or accrued expenses.

Modified cash basis financial statements may present balance sheet accounts. Generally, it would be reasonable to record an account if the origination of the balance stemmed from a cash transaction. For example, assessments received in advance could be presented on the balance sheet since cash was actually received.

When reviewing accrual basis financials, readers should develop an understanding of the relationships between cash balances, accounts receivable and other asset and liability accounts to revenue and expense accounts. If assessments have been billed but owners have not paid, accounts receivable will increase. Depending on the extent of delinquencies, a bad debt provision may be required. Further, the Board of Directors should review the impact of unpaid assessments on cash balances. If delinquencies are significant, Boards may need to review budgeted expenditures and decrease monthly costs in order to retain acceptable cash balances.

MODIFIED ACCRUAL BASIS

CONSISTENCY

The modified accrual basis is very common for monthly financial statements prepared for common interest realty associations. Assessments and other member charges are recorded when earned/ billed which falls under the accrual method. Expenses are typically recorded when disbursements are made (cash basis). Sometimes expenses are also accrued. Modified accrual is a hybrid method requiring the reader to understand what revenue and expense accounts are recorded on the accrual basis and which are recorded on the cash basis.

Whichever basis of accounting is used, accountants, bookkeepers and managers should ensure that the basis is applied consistently.

Use of a modified cash basis is not recommended. There is very little authoritative guidance for the modified cash approach other than requiring that modifications have substantial support.

FULL ACCRUAL BASIS The accrual basis of accounting is the most complete and accurate method for recording revenue when earned and expenses when incurred, regardless of when cash is received or paid. Under the accrual basis, associations present a balance sheet that includes accounts receivable (assessments billed but not received) and prepaid assessments (assessments received from owners but not yet billed/ earned), loans, deferred revenue, prepaid expenses, accounts payable.

month. If an owner pays their assessments before they are due, the association does not recognize the assessment immediately, thus recording the receipt as prepaid. On the first of the next month, the prepaid assessment would be recognized as income.

INITIAL QUESTIONS Returning to our questions at the beginning of the article, comparing actual results to budgeted amounts is a commonly applied tool to see how an association’s operational results compare to plan. Under the cash basis, assessment income might have been originally earned in any accounting period. Maybe the receipt represents a balance an owner owed from two years ago. Should that be presented as current period income? Under the cash basis, it would be. Under the accrual basis it would not. What if the current financials report expenditures far below budget? That could be caused by various things: under the cash basis invoices may not have been paid or recorded. In the next period, the cumulative unpaid invoices are paid and recorded as an expense, further making comparison to budget challenging.

Assessments are recorded when billed to owners, and typically represent budgeted amounts. The aggregate cumulative uncollected balances for all owners are combined and presented on the balance sheet as accounts receivable. As owners’ payments are received, accounts receivable balances decrease.

We encourage boards, owners and other readers to understand what basis of accounting is used for their association’s financials. Without that knowledge it is difficult to fully understand the accuracy and usefulness of the financial statements.

Assessments received from owners before assessments are earned are considered prepaid. Under the accrual method, assessments are recognized as income when earned, typically on the first of each

Jeremy Newman, CPA is the owner of Newman Certified Public Accountant

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PC and provides audit and tax services for community associations. For more information, email jeremy@hoacpa.com or visit www.hoacpa.com.

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CONTRACTS

Top Five Tips When Negotiating a Construction Contract BY DAVID MILTON AND SCOTT KIERNAN, BECKER

t’s the most wonderful time of the year! Not Christmas, but the time of year when your association is preparing to embark on the magical journey that is called a construction project. Construction projects, like life, are full of surprises, but unlike life, there are some things you can do to eliminate or minimize the impacts of those surprises. It all starts with your construction contract. A well-drafted contract is the result of collaboration between an association’s board, the association’s manager, and the association’s attorney. You obviously have a first-class board, and your manager is one of the finest, so the next step (i.e., retaining a qualified attorney) is key – and fortunately for you, there is no shortage of good attorneys in our local CAI chapter. Yet despite the availability of good attorneys, some associations are hesitant to spend money to have an attorney assist with the negotiation and review of a contract before the contract is actually signed. That hesitation is, however, likely to lead to expensive heartburn (re: litigation that is timeconsuming, expensive, uncertain, and aggravating). 28

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So, the first tip – the most important tip when it comes to any legal issue – is to hire a qualified construction attorney. Hiring a qualified construction attorney protects the association (and the association’s board) by making sure the contract is as fair as possible toward the association. And, if the contract isn’t fair, your attorney helps your association by identifying some of those lesser-known legal pitfalls and then by recommending the rejection of that contract. With that said, there are some general principles that might help you evaluate a construction contract:

1. DEFINE THE SCOPE OF WORK One of the most important things you can do is define the scope of work. If you and your contractor are not on the same page when it comes to what you want done and what the contractor is offering to do, you’re going to run into all kinds of problems. Hiring an engineer Continued on page 30

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CONTRACTS contracts include “escalation clauses” – clauses that explain who pays for what when the costs go up. If your contract doesn’t have an escalation clause, you may end up paying the lawyers what you and the contractor could have been using to keep your project moving along. A project that once seemed affordable can quickly double in costs, often times beyond the control of the contractor. This can almost always be avoided with the proper contract provisions established up front. Furthermore, without the proper payment provisions and/ or lien release requirements, not only can you pay twice for certain work due to the failure to handle a sub-contractor timely, but an association can face construction lien headaches and litigation complications that become out of control.

4. INSURANCE AND ATTORNEY’S FEES

is critical for larger projects that require strict compliance with codes, but no job is too small to have any and all of the details defined up front and made a part of the contract documents.

Should the unfortunate circumstance arise where the contractor causes damages to persons, or property, it is imperative that the contractor has the proper insurance to cover any such claims and/ or damages. With the cost of insurance being staggeringly high for associations these days, the last thing you want to do is have the association’s insurance policies get dinged with claims that clearly should be absorbed by the contractor’s insurance policies. Even if the association is sued, the proper “additional insured” language transfers that risk immediately back to the contractor’s insurance. Last, if litigation ensues over a botched job or breach of contract by the contractor, the proper prevailing party attorneys’ fees language can ensure that the association recovers the legal fees it incurred as a result of no fault of its own.

2. SET THE SCHEDULE AND ANTICIPATE DELAYS

5. QUALITY ASSURANCE

Again, definition matters. When must the project start? When must the project be completed? What happens when – not if – construction is delayed? What if the delay is caused by events beyond anybody’s control (e.g., weather, supply-chain issues)? Clear expectations prevent misunderstandings. Proper contract provisions can shift delay liability back on the contractor, and even contemplate remedies for the unexpected.

This is an oft-overlooked component of a construction contract. If the contract is for the installation of four pavers for the new flowerpots by the pool, quality assurance is something that probably doesn’t require professional training. But when you’re talking about a multi-million-dollar roof replacement, quality assurance (including the contractor’s compliance with approved plans and state/local building codes) becomes slightly more complicated. Your contract needs to define the role of your quality assurance expert, as well as your expert’s authority to compel compliance with approved plans, state/local building codes, etc. Spending a little extra time and money on a professional engineer or consultant to be the association’s expert eyes on a project is the smartest move any association can make to avoid problems later.

Also, even when you and your attorney collaborate and communicate clearly with your contractor, the need for a change order – an amendment to the construction contract that changes the scope of work – often arises. Your contract should set forth procedures for revising the contractor’s scope of work, and provide authority for when and where a change order is acceptable.

3. COST INCREASES COVID-19, trade issues, inflation, and high demand (for both labor and materials) make cost increases increasingly common, and on larger projects, those cost increases can be significant – we’re talking hundreds of thousands of dollars. Most construction 30

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Often even a small proposal for repair work can cause thousands of dollars in unanticipated costs later, which likely could have been avoided with even the smallest review by association counsel. A few simple changes and/or a short addendum to a contract can be surprisingly affordable and possibly the best fiduciary decision a board can make in any given year.

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The Benefits of Membership Community Managers | Management Company Executives | Homeowner Leaders | Business Partners

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The Benefits of Membership cont’d. CAI FOR YOU CAI is the foremost authority in community association management, governance, education, and advocacy for the 345,000 homeowners associations, condominiums, and co-ops in the United States and millions of communities worldwide. As a member of CAI, you are part of a global network of nearly 40,000 community managers, management company executives, homeowner leaders, and business partners.

Community Managers Elevate your career and increase your salary with tailor-made education and credentials that give you a competitive edge in the growing community association business.

Management Company Executives Communities count on you for professional management and guidance. CAI membership helps your company boost credibility and increase exposure to potential clients.

Homeowner Leaders CAI provides resources and support to save your association time and money, and education to lead your community successfully.

Business Partners Membership conveys your commitment to the community association industry and the potential for expanding your client base!

MAKE THE MOST OF YOUR MEMBERSHIP Visit www.caionline.org regularly for the latest CAI happenings and information. Log in to the CAI website and your profile to ensure all contact information is current so you don’t miss out on CAI news, emails, and other important updates. Get involved with your local chapter—attend an education or networking event and maybe even join a committee!

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BOARD MEMBERS

A Brief Guide To Board Member Best Practices BY CASTLE GROUP

erving on the board of your association can often times feel like a full-time job, which is more than what most members signed up for. If you have no experience in property management outside of your new role now, this is likely unfamiliar territory for you – and that’s okay.

3. KNOW YOUR GOALS

With industry leaders like Castle Group, we are well versed in the roles and responsibilities that fall on the Board, and can help you navigate them. Here are just a few of the things you should know as a board member of your community:

Maybe your 2022 goal is to reduce expenses or maybe it’s to reallocate current funds to meet other goals – whatever your objectives may be, they are all the more attainable when you have a firm understanding of what they are and can then build a game plan in order to accomplish them.

A healthy association is one that establishes realistic and achievable goals. They help provide the board clear guidance on which older amendments they need to reevaluate, any new ones they should propose, what community updates to plan and budget for, and so on.

1. KNOW YOUR MATERIAL Put on a fresh pot of coffee and polish up your reading glasses – it is time to read through your governing documents! This is a critical item that will be essential to you and having a comprehensive understanding of them will only assist you as they will serve as the guidelines for your community’s operations. They will also help you grasp exactly what your role is as a board member and the responsibilities that follow.

2. KNOW YOUR AUDIENCE You represent the community that you serve, so who are they? What do they want, what are their expectations, and are you aware of their needs? For example, if you’re living in a community that has a large snowbird population, consider electronic voting and virtual meetings so you can hit the necessary thresholds to pass amendments when they aren’t able to attend physically. Or on the contrary, is technology more of an issue for them than it is a solution? Then make sure your important voting meetings are scheduled from October through April. Always remember that your role is to make decisions that benefit the majority of your association, so make sure you get to know them. 36

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4. KNOW YOUR LIMITS It is ok (and expected) to ask for help. Do not overwhelm yourself with things you are unfamiliar with. No one expects you to know the ins and outs of maintenance, engineering, real estate, insurance, and so on. Phone a friend – call in consultants, advisors, and professionals. And remember, if you have a management company, they are your biggest resource. Most management companies employ subject matter experts that can assist you with your questions. One of the many perks of being managed by a seasoned firm is that they will always know how to support you. While there are many best practices for a board member to follow, being an advocate for your community is the top one – it’s the reason you were given this role. The best way to do that is to bring on a team of experienced professionals to be your partner in managing your community. With the help of a company like Castle Group and our 40 years of experience in the industry, you will be able to run your association with ease. To learn more about what we can do for you, contact us at 844-8155321 or visit castlegroup.com.

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EMBEZZLEMENT

How to Protect Your Association Funds From Embezzlement BY HEATHER J. KARAMITSOS, SENIOR VP / DIRECTOR OF ASSOCIATION BANKING, AMERICAN MOMENTUM BANK

ccording to news reports, a lawsuit was filed in January against a Naples-based association management company alleging the company’s owner stole funds from 34 associations that could total in the tens of millions of dollars. While many property management companies are reputable, reports of alleged embezzlement, like the above example, can understandably cause concern for association board members. It’s impossible to fully protect an individual or an organization from embezzlement. However, there are red flags associations should be aware of and protections that can be put in place to help mitigate embezzlement risk. Here are a few tips that association board members can follow to feel more confident that their funds are protected.

1. ONLY HIRE A LICENSED BONDED PROPERTY MANAGEMENT COMPANY In Florida, you can verify whether a property management company is licensed on the state’s Department of Business & Professional 38

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Regulation (DBPR) website. To further confirm legitimacy, ask the management company to provide proof of bonding. A management company signing on an association’s bank accounts without proper bonding is a red flag. The management company bond protects the association in the event a management company employee commits theft or fraud.

2. HAVE THE RIGHT INSURANCE COVERAGE Commercial crime insurance, also known as a fidelity bond, is a statutory requirement for officers and directors of associations in the state of Florida. Pursuant to Florida Statutes 718 and 720, an association must maintain a fidelity bond to cover all persons who control or disburse funds of the association. The fidelity bond must cover the maximum funds that will be in the custody of the association or property management company at any one time. “Persons who control or disburse funds of the association” includes, but is not limited to, individuals authorized to sign checks on behalf of the association, as well as the association’s president, secretary and treasurer. Continued on page 40

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EMBEZZLEMENT

While a majority vote from owners of certain associations may elect to waive the requirement of obtaining a fidelity bond for the association, we strongly recommend getting appropriate coverage.

using a bank that understands and specializes in association banking and understand your industry. These banks can often pick up on red flags to help reduce the risk of fraud losses.

Check with your insurance carrier to ensure you are fully covered in case of embezzled funds. Note that if your management company is using a fraud prevention tool (more on that below), mention that to your insurance agent for a potential discount on your policy.

Many association-friendly banks, like American Momentum Bank, have partnerships and integrations with property management software systems that include fraud-prevention tools. For example, daily auto-reconciliation involves the bank sending a file to the management company’s software daily that lists every transaction that cleared the accounts. The software automatically matches these transactions to the check register, and if something does not match, an alert is put out to review. This allows the management company to report the fraud to the bank within 24 hours, ensuring the item can be returned and no loss is taken.

3. PAY ATTENTION TO BANK CARDS AND DOCUMENTS Board members should pay close attention to bank signature cards before signing them. These cards should always list the association’s full legal name as the account holder, and not the name of the property management company or any other entity. It is okay to have the management company listed as “care of” in the address description, but the account legal name or title should always be that of the association. Also, pay close attention to the bank statements in your monthly financials. Confirming that the bank statements you’ve been given match up to the bank data showing in the online banking portal will help ensure you’re not reviewing altered bank statements. Most management companies can provide board members with “view only” access to see their bank accounts online. This gives you the ability to view current balances, deposits with images and cleared items, and to match statements from the bank to the statements in your monthly financials.

5. KNOW YOUR BANKER If you haven’t already, ask to meet with your association banker. The management company can introduce you to the banker who manages their relationship. Review your concerns with the bank directly, and let them advise you on how your accounts are protected and what fraud prevention tools they have available. While these tools cannot guarantee you won’t experience fraud or embezzlement, they can help ensure you’re protected from loss, should the unexpected occur.

Heather J. Karamitsos is Senior VP / Director of Association Banking at American Momentum Bank and is a state-certified continuing education provider for

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Joe Smith Attorney

Curt Sullan Attorney

Ryan Pardue Attorney

• You do not pay legal fees or costs unless we recover for you. • Our team focuses exclusively on construction defects throughout the state of Florida.

• Secure Cloud-Hosted Portals for Boards • Financial Management including Tax and Audit Management • Homeowner/Resident Support • Deed Restriction Management • And So Much More...

100 S. Ashley Dr., Suite 200 Tampa, FL 33602 | 813.816.7140 1343 Main Street, Suite 303 Sarasota, FL 34236 | 941.777.6776 Available by Appointment

RealManage.com | (866) 403-1588

interested in getting more involved? join a caicf committee! If you are interested in getting more involved in the chapter, joining a committee is a great thing to consider. Below are the different committees that we currently have active. Please feel free to contact any of the following committee chairs: CA Day/Trade Show Committee Gina Holbrook Premier Association Management gina.holbrook@premiermgmtcfl.com

Gala Committee Ken Zook Waterford Lakes ken.zook@mywaterfordlakes.org

Membership Committee Jason Martell Martell & Ozim jmartell@martellandozim.com

Communications Committee Benjamin Isip Towers Property Management, Inc. ben@towerspropertymgmt.com Education Committee Negar Sharifi Assured Partners negar.sharifi@assuredpartners.com

Golf Tournament Committee Scott Pollock Sentry Management spollock@sentrymgt.com Legislative Committee Tom Slaten Larsen and Associates tslaten@larsenandassociates.com

Jessica Cox Leland Management jcox@lelandmanagement.com

Fran James Sentry Management stonebridgeplace@csbonline.net

David Furlow Leland Management dfurlow@lelandmanagement.com

Social Committee Tara Stone Your Private Adjustor tara@yourprivateadjuster.com Sunshine Foundation Committee Jennifer Agravat Asphalt Restoration Technology Systems jennifer.agravat@asphaltnews.com

1ST QUAR T ER 2022 | CENT RAL FL O R I DA TI ME S

2022 MEDALLION SPONSORS!

platinum

Kipcon Leland Management Munyan Painting One Florida Bank Pacific Western Bank Performance Roofing Premier Association Management Reserve Advisors RL James Inc. Roof Bids The Ruggieri Law Firm The Sherwin-Williams Company SOLitude Lake Management Stephens & Company Stone Claims Group Stratus Roofing Truist Association Services Valley Bank Vice Painting Yellowstone Landscape

Alliance Association Bank Angius & Terry, LLP Construction Defect Attorney Askanadjuster.com Asphalt 365 Asphalt Restoration Technology Systems AssuredPartners Ball Janik, LLP Becker BEHR & KILZ Paints & Primers BrightView Landscape Services Cepra Landscape CIT Bank Classic Landscape Company Cohen Law Group Dehlinger Construction DMI Paving & Sealcoating EmpireWorks Reconstruction Enviro Tree Service Glickstein, Laval, Carris, P.A. I&E Construction, Inc. Juniper Landscaping

gold

Associa Community Management Professionals Burg Simpson Eldredge Hersh Jardine PC Centennial Bank

Martell & Ozim, P.A. SPT - Specialized Pipe Technologies Towers Property Management United Land Management

silver

Castle Group Melrose Management Partnership

Rabin Parker Gurley, P.A. RealManage