Where’s the Money? Let’s Talk About It…

Posted by MyEZCondo on January 27, 2012 in CIOA, Communication, Financial, Newsletter

I found myself in quite a pickle recently. For the first time since my presidency of the Board of Directors at my condominium association I had to adjust my annual budget proposal to include a new item – “Delinquency”. What is “Delinquency” and why is it a part of the association’s annual budget? More importantly, why isn’t it part of yours?

Over the past two years, I have seen the poor economy strike several of my condominium neighbors. I am sure you have as well. Record unemployment and underemployment (folks not making what they are accustomed to) have led to a record number of late payments of common fees, foreclosures, and underfunding of annual budgets at HOAs in Connecticut and all across the country. The end result can be devastating to a condominium association that counts on its revenue supply in the form of common fees and/or special assessments to pay its bills in timely fashion.

With the new CIOA laws upon us, it has become very clear to me that protecting the association’s assets and levying the appropriate level of common fees is more important now than it has been in years. While reviewing the cash flow of my association, I noticed that in any typical month, roughly 10% of revenues were lagging 30 days or longer. We were paying our bills and residents were ultimately paying their fees and late charges but the 10% number remained consistent from month to month. While I do not doubt that the association is in overall good financial health, I decided it was time to tackle our delinquency issue before it became a crippling disorder.

After taking the usual data into account to prepare the annual budget, I arrived at what would be a typical budget presentation – a Balance Sheet with Expenses on one side and Income on the other. Everything added up so that our Expenses would be covered and our Reserve Fund would receive a healthy contribution to as well. As a Board President, I always find it encouraging to present a balance budget with a planned contribution to the Reserve Fund that doesn’t ask fellow residents to dig too deeply into their wallets.

The big difference this year was that after the balanced budget was presented, I then asked for an increase to common fees to help defray the potential damage that would be brought on if our current level of delinquencies were to increase. I explained to my fellow residents that if such delinquencies were to continue, surely the association would suffer in the form of services not being provided due to the lack of available funds. I offered three choices – do nothing, or increase common fees by 5% or 10%. The vote went in favor of the 5% increase to help offset potential delinquencies. It was not unanimous nor entirely popular, even amongst my fellow Board members.

I am very proud of my condominium association and I am pleased to report that with proper explanation, you, too, can achieve a financial victory in these troubled times. Adding a “Delinquency” line item is long overdue for many associations. All of the industry experts have been warning associations to protect themselves from financial stress. If your association is suffering from routinely delinquent collection of fees, I encourage you to take action immediately. This simple line item is likely to be is just what the doctor ordered when it come to being able to pay your association bills on time without having to present an unpopular special assessment.

Tags: Communications, Community, Condominium, Condominium Newsletter, Delinquency, Finances, MyEZCondo

Community Communications in the Age of CIOA Revisions

Posted by MyEZCondo on January 25, 2012 in CIOA, Communication, Newsletter

Community Communications in the Age of CIOA Revisions

I have had the opportunity to moderate numerous discussions between community association attorneys and concerned members of Boards of Directors from condominium associations about the impact of the revised Common Interest Ownership Act, commonly known as CIOA (pronounced like the state of “Iowa” with a hard “K” in front of it). In the state of Connecticut, it will impact nearly every common interest community in one way or another.

My primary business is producing newsletters and communication products for community associations. While CIOA does not specifically address newsletters and websites, it is clear to me that the spirit and intention of the law is to shed light on the business proceedings of the governance of condominium and community associations. Many of the provisions of the bill are designed to give homeowners access to records that are kept by the association, and, in particular those records kept by the Board of Directors, their appointed committees, and the firms that manage their properties or act on behalf of the association’s members.

I have long held to the position that a well-informed association is a content association. I have also openly declared the need for communities to have regularly scheduled newsletters, notices, website updates, and other methods of communication. It is clear to me that this new legislation also supports these ideals. It is not enough to serve in earnest on the Board of Directors. Top-notch recordkeeping and timely dissemination of important information to all association members is no longer a favor to offer. It is a legal requirement that could bring dire consequences if ignored.

To that extent, I encourage my fellow condominium Board Presidents and Members to strongly embrace the idea of openness. Not just as a requirement of law but as a best practice in governing. You volunteered to govern your community. You were elected to serve in the best interest of all residents. You should have no problem with having the “light of day” shine brightly on your governance. In fact, I would encourage you to embrace it and understand that communicating with your fellow condominium association members is an excellent way to gain consensus on projects, open yourself to new possibilities, and even foster an environment where new volunteers come forth to serve.

I acknowledge that new laws can be challenging. At 58 pages and counting, fully comprehending the new CIOA legislation is a daunting task and may best be left to your community association attorney. However, you can embrace the spirit of the law and give yourself an advantage in governing at the same time. If you don’t already have a community newsletter, there has never been a better reason to start one. If you do already have a community newsletter, there has never been a better time to give a good looking over and make sure that it is as CIOA-friendly as it should be.

You should evaluate your distribution channels as well. Newsletters and notices that are mailed to members are CIOA compliant. Website postings and emails can be CIOA compliant but open you up to the possibility of lawsuit if not received by your intended recipient. For me, that means I will continue to use email and website postings for general information disclosure but my newsletter and meeting minutes will be mailed as well. I would rather communicate too much than risk having a member sue my association for not properly disclosing information.

I am interested in your thoughts on the matter. I have posted this article on the MyEZCondo blog at www.myezcondo.com. Visit the site and search for “CIOA” to find this post. Tell me about your community’s communication challenges in the age of CIOA and how you intend to cope. Great communication efforts begin with a single conversation.

Tags: Attorney, CIOA, Communications, Condominium, HOA, Lawyer, MyEZCondo, Newsletter, Newsletters, Volunteer, Websites

Explaining How You Govern Your Condominium Association

Posted by MyEZCondo on January 23, 2012 in CIOA, Communication, Newsletter

In a speech to the House of Commons in 1947, Winston Churchill said:
“No one pretends that democracy is perfect or all-wise. Indeed, it has been said that democracy is the worst form of government except all those other forms that have been tried from time to time.”

Leaders like Winston Churchill aren’t routinely needed to govern a community association, although I have heard stories where Churchill himself may have been loath to step in and take charge. While community associations come in many shapes and sizes, governance and the principals of governance are quite common. Community associations that are governed by the Common Interest Ownership Act have seen some of their rules of governance change or get modified this past year. It is my opinion that telling the story of your community’s governance has never been more important. Here’s how to do it.

Your community’s governance is outlined on paper in your association documents and the state laws that either agree with or supersede your methods of governance. However, for those of you who have read your association’s documents in detail, you know that these rules and regulations can be a bit dry and confusing to many of your association’s members. Why not bring the document to life by describing the process by which your community is governed?

Basic principles of democracy are employed in so much as every community member has a voice in the form of a vote. However, the association behaves more like a republic once those votes are cast to elect directors to the Board. Finally, the Board President routinely has substantial powers to conduct the business of the association. These powers are not usurped but rather granted by the vote of the members of the association who vote in person or via proxy at regular meetings of the association. Disgruntled association members may not agree with actions or decisions made by the Board but they should be aware and respectful of the process by which those decisions are made. Further, since directors are elected by free votes of the citizenry, directors and officers can be voted out of office via due electoral process.

It should come as no surprise to regular readers of my blog that I believe in full disclosure at all times with regards to community governance. Too many times, I hear of community members not knowing or understanding how their community is governed. A simple newsletter can dispel this problem. Telling the story of how your community is governed is the first step in cultivating future leaders. A community can only thrive as well as it is governed.

If all of this seems a little daunting, let me leave you with another quote from the great man himself. During World War II, on June 18, 1940, in another speech to the House of Commons, Winston Churchill gave the following words of inspiration: “Let us therefore brace ourselves to our duties, and so bear ourselves that if the British Empire and its Commonwealth last for a thousand years, men will still say, ‘This was their finest hour.’”

I hope that you will find success in telling your community association members the story of their governance. Perhaps you’ll inspire them to become more active and even seek out leadership roles within your community. At the very least, you will know that you have done your best to inform your members that their community is well-governed and that the rules of governance not only ask for but require their active involvement. It may well be your finest hour as well.

Tags: CIOA, Communications, Community, Condominium, Condominium Newsletter, HOA, MyEZCondo, Newsletter, Newsletters

Using Your Newsletter to Explain CIOA to Your Community Association

Posted by MyEZCondo on January 21, 2012 in CIOA, Communication, Newsletter

Using your condominium newsletter to discuss CIOA with members of your community association can be a vital component to a sound overall communication program. Interestingly, CIOA laws are designed for the protection of individual homeowners. Yet, unless an individual homeowner is aware of the changes to the law or hires an attorney to bring suit against the association, the reality is that most residents are unaware of CIOA or how it impacts them. My advice to clients is to get ahead of the story and make sure your communication efforts are CIOA-compliant.

Before I begin, I need to point out that I am not an attorney. I make no representation as to the legal soundness of the advice in this article. I am an experienced HOA Board President and an expert in community association newsletters and communication products. You should always seek the advice and counsel of an experienced community association attorney when legal questions arise. My personal experience is with the CIOA laws here in Connecticut but there are similar laws in every state to protect the rights of homeowners and to assure that sound governance principals are followed within community associations.

A great deal of emphasis on open communication is stressed over and over in the CIOA laws. Meeting notes, financial data, vendor transactions are all subject to new levels of scrutiny from individual homeowners. It may make sense to get ahead of some of these inquiries and actually publish some highlights in your newsletter. I have always advocated full budget disclosures to homeowners. After all, it is their money and they should know where it is going and how it is being spent.

With all of this openness comes a new level of opportunity. If homeowners had previously felt shut out or sheltered from the activity of the Board, this is a great time to bring some fresh faces and ideas to the Board. We all know that informed residents become involved residents. Someone who takes an interest in the meeting notes may be a future candidate for Board Secretary. Someone who takes an interest in the association’s finances may be a potential Board Treasurer. Seize the day and don’t miss an opportunity to turn an inquiring mind into a productive volunteer.

Of course, CIOA laws bring challenges with them as well. In many instances, the communication requirements of the act will force communities to spend more on record-keeping and distribution. Fortunately, the act in Connecticut does allow for more electronic communications so it is a good time to look into email and website communications. Again, there are legal provisions that guide these activities so please be sure you understand the ramifications of going paperless with your communication efforts.

I wholeheartedly suggest you embrace the spirit of CIOA in your community’s communication efforts. I have included a link to the CAI CIOA reference page (http://caict.org/LAC_CIOAChanges.html) in the last several issues of my own community newsletter. I want my community members to know that their BOD is CIOA-compliant and that we are aware of the law. I can report that “so far, so good”. I’ll bet you get the same result.

Tags: CIOA, Community, Condominium, Condominium Newsletter, HOA, MyEZCondo, Newsletters, Websites

Governing Those Who Don’t Care

Posted by MyEZCondo on January 17, 2012 in Communication, Governance, Newsletter

In May of 1966, comedian Jack Parr said on his television show, “I don’t vote for politicians. It only encourages them.” By 1976, the sentiment was so popular it was regularly seen on bumper stickers all across America. While undoubtedly humorous, that same sentiment can have dire consequences in your community association. Lack of involvement and indifference towards association leadership are not signs of a healthy community. In fact, I would suggest to you that the fewer association members that vote, either in person or by proxy, the more concerned you should be as a community leader.

Voting rights are inherent to condominium ownership. When condominium owners decide not to vote, an association can find itself paralyzed. In situations that require a supermajority or very high per centage of unit owners to vote, apathy and lack of voters can completely stymie an association’s efforts to pass new rules that may be required for purchasing new property, adding or removing common elements, or securing financing for capital improvement projects.

How do you make people exercise their right to vote?

Technically, you can’t make unit owners exercise their right to vote. Not voting is, in itself, an exercise of the right to vote. What you can do is make the voting process as simple and painless as possible.

Look at how many votes are eligible to be cast by your association members. Generally speaking, one vote per unit is normal. So if you have 100 units in your association, there are 100 votes to be cast. Look at your most recent votes. Were any of them for the full amount of votes that could have been cast? Look at how many votes were not cast and think about how best to involve the non-voters.

Why aren’t people voting?

The answer may not be as simple as you think. It is easy to dismiss the electorate as uncaring or apathetic but the truth may lie a bit deeper.

Comfort with the status quo is often a reason people say they don’t vote. If the community is performing well – bills paid on time, common fees steady, no special assessments on the horizon – unit owners may simply be content and not feel the need to change. The lack of real issues may keep the electorate at bay.

Frustration can also be a factor. If a unit owner is in a minority, the unit owner may feel as if their vote carries little or no weight. If they feel their vote doesn’t matter, they may simply choose not to cast it.

Ignorance of their right to vote can also play a factor. Even communities experiencing a low turnover rate of 10% per year have new unit owners every year, some of whom may not even know about their voting rights. They may not vote because they don’t know that they should.

Scheduling conflicts can also create missed voting opportunities. More and more people are working second and third jobs making it difficult to attend a meeting where they can cast their vote.

Fixing the Vote (in a good way, that is!)

Take a look at the rules for voting and voting by proxy in your community. Also, look at your state’s rules on voting by proxy as well to make sure you aren’t creating a situation where one person is casting too many votes. Use your community newsletter or HOA newsletter to tell the story of how important voting is within your community association. Tell the story of how easy it is to vote by proxy for those unit owners who cannot attend meetings where votes are cast. Be sure to make it simple and easy to understand. Include a sample proxy ballot in your condominium newsletter or HOA newsletter and be sure to give simple instructions for how to cast a vote by proxy.

If the only time unit owners show up in mass to vote is when there is a problem facing the association, you can be assured that the meeting and vote will not go well. Angry voters create volatile communities and a toxic environment for harmonious living.

Encourage your unit owners to vote. Always strive for 100% of the electorate to be represented. If you make it simple and easy to understand, you will be rewarded with greater voter turnout and higher support for the decisions that are made that will affect all unit owners.

Tags: Communications, Community, Condominium, Condominium Newsletter, Governance, HOA, MyEZCondo, Newsletter, Newsletters, Websites

Community Associations and Social Media

Posted by MyEZCondo on January 16, 2012 in Communication

Does your condominium association or HOA use Facebook, LinkedIn, Twitter or other social media? I’d like to hear your stories – successful and other. Post directly to the MyEZCondo blog or email me directly at bob@myezcondo.com.

Tags: Communications, Community, Condominium, HOA, MyEZCondo, Newsletter, Newsletters, Websites

Telling the Story of Community Association Insurance

Posted by MyEZCondo on January 15, 2012 in Communication, Financial, Insurance, Newsletter

Most condominium association residents are likely to have little or no understanding of the insurance that protects the association in which they reside. Let’s face it; there just isn’t a lot of glamour in discussing deductibles, coinsurance, liabilities and such that make up the community association insurance story. Telling the story of your community’s insurance coverage is going to be a challenge but if done properly, can yield a wealth of rewards.

Start with the basics. Every resident needs to know that the community has insurance and that the insurance covers certain elements which the entire community owns in common. Every resident also needs to know that community association insurance is not the same as homeowner’s insurance and that every resident needs to have an individual homeowner’s policy to cover those risks not provided for in the association’s policy. It is a great idea for every resident to meet with an insurance professional to discuss their personal insurance needs. Some communities have even hosted an Insurance Night to help residents make contact with an insurance professional who understands their individual needs.

Continue to tell the story of how the community’s insurance was chosen. Risks and liabilities are more easily understood when described as items, so if your association insurance covers things like fire and water damage, it is best to spell out what is covered. Deductibles vary widely in insurance products so it is also a good idea to list the specific deductibles faced by the association and residents in the event that a claim needs to be made. It would be a good idea to explain the claim process (who to call, how to file, etc.) so that residents are prepared if a claim arises.

Tags: Communications, Community, Condominium, Condominium Newsletter, HOA, Insurance, MyEZCondo, Newsletter, Newsletters

My Year of Living “Legislatively”

Posted by MyEZCondo on January 15, 2012 in Communication, Governance, Newsletter

“The less people know about how sausages and laws are made, the better they’ll sleep at night.”
– widely attributed to Otto von Bismarck, German aristocrat and statesman

“Decisions are made by those who show up.”
– fictional President Josiah Bartlet on the TV show “The West Wing”

Before I begin, I need to point out that I am not an attorney. I am a volunteer member of the Connecticut chapter of the Community Associations Institute’s Legislative Action Committee (LAC). I nominated myself and applied to join by submitting an application to CAI’s Government and Public Affairs (GPA) and was approved for the 2010-2011 term. I received a nice “welcome” letter from the CAI National Board of Trustees and a neat ribbon I can wear to appropriate events.

I then began attending regularly scheduled meetings of the CAI-CT LAC. This is when I learned first-hand about how laws were made that affect all of us who own, live, or work in Connecticut’s condominiums and community associations. Otto von Bismarck was right. I slept better before I knew how they were made.

Any of us who have ever run for office understand what strange bedfellows politics can make. In a world driven by personal agendas and political career advancement, it is not uncommon for the good of the common man to go unnoticed. Quite frankly, we live in the world of the photo opportunity and the sound bite, where it is better to look and sound like you are “doing good” than actually doing good. The process of reforming legislation and introducing helpful legislation is further complicated by a cast of characters who make up the legislature and other interested parties.

Prior to my involvement with the CAI-CT LAC, I wasn’t all that clear on what lobbyists do and why we needed them. After spending a year watching the system work, I am convinced that not only are they needed, they are the only thing that stands between the “Best Practices” in governance put forth by CAI-CT and a complete overhaul of how Boards of Directors are allowed to conduct the governance of their own communities. CAI-CT has two excellent lobbyists in the forms of David O’Leary and Anita Schepker. These hard-working professionals keep the LAC fully informed of the goings on in the state legislature. Without their continual involvement and dogged determination to keep us informed and involved, there would undoubtedly be a great deal of bad legislation for our state’s community associations to contend with. Thank you, Dave and Anita.

Of course, lobbyists can only do so much. The rest of the work comes from the LAC, itself, led by the hard-working leadership of LAC Chair Scott Sandler and the dedicated team of LAC members who give tirelessly of themselves to keep our message on track. The LAC is routinely called upon to draft bills and/or provide feedback on bill measures that affect every community association member in the state. The nature of this work explains why most of the LAC members are practicing attorneys, although that is not a requirement to serve on the committee, which also boasts several non-attorney members, like me.

I admit to being a fan of TV shows like “The West Wing” and I included the quote from the show above as a reference to my experience. When I had the opportunity to speak before the Judicial Committee in Hartford in March of 2011, I was touched by how many people had come out to influence the decision-makers. For better or worse, the decisions would be made by those who showed up. It was my first appearance at the Legislative Office Building and I had the opportunity to speak before the state representatives and senators who would ultimately vote to pass or deny the bills in question. It was an experience I will always remember and I feel I am a better citizen for having participated. I encourage each of you to consider testifying on bills like those that your local LAC identify as critical to your continued enjoyment of your condominium or community association.

In conclusion, I encourage you to take a more active role in the politics of your state’s community association laws. I have learned so much in my short time serving on the LAC. I shudder to think what laws the state legislature might be tempted to enact in the interest of “doing good” without the hard work and dedicated efforts of the CAI-CT LAC. There is a wealth of information at the CAI website – http://www.caionline.org/govt/Pages/default.aspx and, of course, at your local CAI chapter website.

Tags: Attorney, Communications, Community, Condominium, Condominium Newsletter, Governance, HOA, Lawyer, Newsletter, Newsletters, Volunteer, Websites

The Story of Democracy in Action in Your Community Association

Posted by MyEZCondo on January 14, 2012 in Communication, Governance

It Begins with Discontent
Citizens of Egypt have toppled their government. Protests throughout the Middle East threaten to bring a new form of government to many countries. The Tea Party movement has gained great traction in America. Thousands protest at the state capitol in Wisconsin. It seems everywhere you look there is an air of discontent in how people are being governed. Can condominium and community associations be far behind?

I’ve seen discontent spread to community associations across the nation. It is showing itself in complaints to state’s Attorney Generals, State Representatives and Senators, and even local politicians. With as many as 1 in 6 residents living in condominiums or other community associations, it is no wonder that these leaders heed their call. One needs only to turn on the evening news to see the outcome of not listening to the disenfranchised.

A Call for Democracy
The cornerstone of democracy is allowing citizens a right to be heard and to have a say in how they are governed. I think it is fair to say that in most communities, there is a democratic process in place that allows for free exchange of thoughts and ideas between residents, the elected Board of Directors that govern them, and, where applicable, the Property Management firm that oversees the business needs of the Association and tends to the day-to-day business of the community. Community leaders are elected based on a popular vote of the citizens and are subject to recall by the citizens if they are deemed to be doing a poor job. Simply put, most of the common interest communities in America are run this way and function perfectly well.

But what about those associations that aren’t functioning well? How will they restore democracy to their communities? There is no shortage of proposed legislation. Depending on which state you live in, there is an abundance of laws that provide plenty of consumer protection for community association residents. An informed association resident has a wealth of tools at his or her disposal with which to protect the democratic process. An informed member of a Board of Directors has also been given a blueprint for success by applying proper methodology into the decision-making process.

Education and Communication are Part of the Problem
From what I have gathered in listening to complaints filed against Property Management firms and Board of Directors, there is an underlying problem of education and communication. I have not personally witnessed specific malice practiced by powers that be over members of their association. What I have seen is well-intentioned volunteers making uneducated decisions that have come back to haunt them. I have seen Board of Directors take steps they consider to be in the best interest of their community members but they have failed to fully communicate the process that went into their decision making. I have seen association members make accusations against their Board of Directors and Property Managers because they haven’t agreed with a decision that was made on their behalf. They perceive a denial of their democratic rights.

Education and Communication are Part of the Solution
As a community association communication expert, I cannot stress to my fellow members of Boards of Directors how important your communication efforts are. It is not enough to do the right thing for your association. You have to assume that residents don’t know what you are doing unless you tell them. You have to assume that they will be suspicious of what you are doing if you operate in a vacuum. Most state regulations require a certain transparency to how you operate. I encourage you to embrace the spirit of these laws and allow them to make your job of governing easier with regards to communicating with your fellow residents. Use your newsletter and community website to tell the story. Tell it well and tell it often.

In these times of turmoil, I am asking everyone to take a step back, take a deep breath, and look at the likely outcome of quick decisions and short-term fixes. I am asking everyone to think about the positive outcome of “building community” within your community. There may never be a utopian state where everyone agrees with every decision that a community needs to make to thrive. Surely, we can all agree that the process by which those decisions are made is a one which embraces democracy and invites a community to become stronger because of the process. Long live the democracy!

Tags: Community, Condominium, Condominium Newsletter, Governance, HOA, MyEZCondo, Newsletter, Newsletters, Websites

Maintenance and Construction. Fact or Benefit?

Posted by MyEZCondo on January 13, 2012 in Communication, Newsletter

Did your community get a new roof this year? Was your parking lot repaved? Was the pool filtration system overhauled? Were your decks replaced? Chances are pretty good that your community either underwent or will soon undergo a major construction or maintenance project. Don’t miss this opportunity to tell the story of your project or you may just be leaving money on the table!

I am often asked about the difference between a fact and a benefit as it pertains to preparing a community newsletter. As a former sales and marketing guy, you can bet I know the difference between a fact and a benefit. In construction and maintenance issues, the facts often describe the tangible details of the project such as the cost, the materials used, the contractor chosen to perform the work, how long the project will take and things of that nature. While those items are newsworthy, they won’t help you win over critics or skeptics. For that task, you will need benefits.

Benefits, quite simply, will help you tell your maintenance and construction story in such a way as to show your residents what is in it for them. Benefits are far less tangible but far more effective in explaining the need for a project and the reason to spend the association’s money. If you think about the last major purchase you made, you will most likely remember that why you bought the item is more important than what you paid for it or what you even bought. The same mentality applies to maintenance and construction projects. Here are a few examples:

Item – New Roof Installed
Fact – Shingles carry a 30 year warranty
Benefit – Interior of home stays drier

Item – Blacktop Sealing
Fact – Creates a waterproof barrier
Benefit – Underlying pavement lasts longer

Item – New Pool Filtration
Fact – More fuel efficient
Benefit – Saves money

Item – New Decks Installed
Fact – Made of Artificial Material
Benefit – Lasts longer, looks better

In many instances, money spent on today’s maintenance and construction project benefits all members of an association with lower costs in the future. Any time you maintain, protect, or enhance common elements of your association, you should do so for the benefit of your members. People want to “know” the facts but they “buy” the benefits. Use the power of benefits to keep your residents happy and informed about all of your construction and maintenance projects. You won’t just build a better property. You’ll build a better community!

Tags: Communications, Community, Condominium, Construction, HOA, Maintenance, MyEZCondo, Newsletter, Newsletters, Websites